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20 July 2012

Statement by the Eurogroup 

Ministers unanimously agreed today to grant financial assistance for the
recapitalisation of financial institutions in response to the Spanish
authorities' request on 25 June 2012. Ministers concur with the
assessment of the Commission, in liaison with the ECB, the EBA and the
IMF, that providing a loan to Spain for the purpose of the
recapitalisation of financial institutions is warranted to safeguard
financial stability in the euro area as a whole. The Eurogroup agreed
that the Fund for Orderly Bank Restructuring (F.R.O.B.), acting as agent
of the Spanish government, will receive the funds and channel them to
the financial institutions concerned. The Spanish government will retain
the full responsibility of the financial assistance.

The financial assistance will be accompanied by policy conditionality
focussing on the financial sector. This conditionality consists of
bank-specific measures, including in-depth bank restructuring plans in
line with EU State aid rules and sector-wide structural reforms that
embrace segregation of bank's problematic assets, and the governance,
regulation and supervision of the banking sector. This conditionality
will be enshrined in a Memorandum of Understanding that will be signed
in the coming days.

The Eurogroup is confident that Spain will honour its commitments under
the Excessive Deficit Procedure and with regard to structural reforms,
with a view to correcting any macroeconomic imbalances as identified
within the framework of the European semester. Progress in these areas
will be closely and regularly reviewed in parallel with the financial
sector conditionality. 

The financial assistance will be provided by the EFSF until the ESM
becomes available, then it will be transferred to the ESM, without
gaining seniority status. It will cover financing needs of up to EUR 100
billion. As required by EFSF/ESM procedures, the specific amount will be
determined based on a thorough bottom-up assessment of capital needs for
individual banks, which has been launched and is expected to be
finalised in September. 

The loans to be used for bank recapitalisation will have an average
maturity of up to 12.5 years, with any individual disbursement having a
maximum maturity of up to 15 years. The EFSF will set aside EUR 30
billion at the start of the financial assistance, which can be used in
case of urgent unexpected financing needs.

The Eurogroup is convinced that the reforms attached to this financial
agreement will contribute to ensuring a return of all parts of the
Spanish banking sector to soundness and stability.