Spain to release bank audits after austerity cuts
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Your support makes all the difference.Spain is set to reveal how much trouble its banking system is in when it releases the results of audits of 14 lenders today.
The stress tests' findings will help the country decide how much money it will tap from a 100 billion euro (£81 billion) European loan facility to prop up its financial sector.
Spain's largest international banks are not expected to need funding. However, many of the country's regional lenders, which are struggling with assets that went toxic after a crash in Spain's property market, are expected to need help.
Rating agency Moody's Investor Services is also expected to issue a report today that some analysts believe will reduce Spanish bonds to junk status.
Spanish stocks were down 0.9 per cent on the country's benchmark stock index early this afternoon. The interest rate, or yield, on the nation's benchmark 10-year bond stood at 6 per cent.
Today's audit results, expected in the evening after European markets close, will come a day after Spain outlined plans to cut spending and raise taxes. The government's 2013 budget was drawn up to convince financial markets it is on track to reduce its bloated deficit. Finance Minister Cristobal Montoro said yesterday Spain's draft budget for 2013 would cut overall spending by 40 billion euro.
Many analysts believe yesterday's budget is part of preparations for another financial lifeline to help the country reduce its high borrowing costs.
Spain is under pressure to take up the European Central on its offer to buy unlimited amounts of government bonds to help lower borrowing costs for countries struggling to manage their debts. Such large-scale purchases of short-term government bonds would drive up their price and push down their interest rate and take some pressure off of financially stressed governments such as Spain.
AP
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