MADRID (AP) — Spain could ask for a rescue of its struggling banks this weekend and one official said the bailout package could be as large as €80 billion ($100 billion) as European finance ministers prepared for the possibility they might have to step up to save yet another country suffering through Europe's debt crisis.
Pressure is mounting on Madrid to ask for help in propping up its banks struggling with by toxic real estate loans and assets. If it does seek a bailout, it would become the fourth member of the 17-nation eurozone to get outside help since the continent's debt crisis erupted two years ago.
Investors and politicians are become increasingly concerned that Spain might not be able to find the money to prop its ailing banks by itself. As a conference call of finance ministers of the countries that use the euro ended Saturday evening, a consensus seemed to be developing that Spain needs help and fast. But the amount of any rescue was still in question. As the call drew to a close Saturday evening, Spain's Economy Ministry said the minister would speak to reporters.
A new report from the International Monetary Fund estimated Spanish banks need a recapitalization injection of at least €40 billion ($50 billion) following a stress test it performed on the country's financial sector. That report came out early Saturday, three days ahead of schedule, underscoring the urgency of the situation.
Swedish Prime Minister Fredrik Reinfeldt, whose country does not use the euro and thus was not on the call, said there was talk of handing over as much as €80 billion. Others have said even more — up to €100 billion — is needed.
Reinfeldt, who spoke with national broadcaster Swedish Radio ahead of the afternoon conference call, called the situation "serious."
"In reality, we're talking about one of the greatest financial rescue operations the world has seen," he said.
Spain, as of Saturday afternoon, had not asked for help, "but we want to prepare if the call comes," said Guy Schuller, a spokesman for Luxembourg Prime Minister Jean-Claude Juncker, who chairs the meetings of eurozone finance ministers. Spanish officials neither confirmed nor denied a request for a bailout was imminent
A phone call earlier in the day among senior officials ended without a request from Spain, an EU official said. He spoke on condition of anonymity because he was not authorized to release the information.
Spain's Development Minister, Ana Pastor, did not tell reporters Saturday whether the country would ask for a bailout but said: "What we're working on at the moment is the recapitalization of the financial entities that need it, nothing else."
While Spain has said it is waiting for two independent audits — due by June 21 — before requesting a bailout, pressure is mounting on the country to act faster.
"The solution will have to be found quickly," Juncker told German public radio station Deutschlandradio.
In an interview published Saturday, the head of Germany's central bank, Jens Weidmann, called on Spain to tap Europe's bailout fund, the EFSF, to prop up its banks.
"If Spain is overwhelmed by the financing need, it should use the instruments created for that case," he was quoted as telling Germany's Welt am Sonntag paper. "The motto cannot be to avoid using the rescue fund at all costs."
If it does request a bailout, Spain would become the fourth eurozone country to do so since the continent's debt crisis touched off two years ago. The three countries that have received rescues thus far — Greece, Ireland and Portugal — are fairly small, and many have worried that bailing out much-larger Spain could call the entire euro project into question. Cyprus, also a small economy, could also be forced to seek a bailout soon.
While Spain's government seems fairly resigned to asking for help, the big question remains how much its banks need, with estimates ranging between the IMF's own €40 billion to as much as €100 billon. The size is important because the rescue, if asked for, must be big enough to make it credible but not so big that investors worry Spain won't be able to pay it back.