Spain is expected to request European aid for its ailing banks at the weekend to forestall worsening market turmoil, becoming the fourth and biggest country to seek assistance since the euro zone’s debt crisis began, EU and German sources said.
Two senior EU officials said finance ministers of the 17-nation single currency area would hold a conference call on Saturday to discuss a Spanish request for an aid package, although no figure had yet been set.
The Eurogroup would issue a statement after the meeting, they said.
“The announcement is expected for Saturday afternoon,” one of the EU officials said.
The move comes after Fitch Ratings slashed Madrid’s sovereign credit rating by three notches to BBB from A on Thursday, highlighting Spain’s exposure to its banks’ bad property loans and to contagion from Greece’s debt crisis.
“The government of Spain has realised the seriousness of their problem,” a senior German official said.
He added that an agreement had to be reached before a Greek general election on June 17 which could lead to Athens leaving the euro zone if parties opposed to the terms of an EU/IMF bailout win.
There was no immediate official comment from the Spanish government. The EU and German sources spoke on condition of anonymity due to the sensitivity of the matter.