In a statement published on 9 of June, the Eurogroup highlighted its support to the Spanish authorities to address the restructuring of its financial sector. Also, it confirmed that the financial assistance would be provided by the EFSF/ESM for recapitalisation of financial institutions; and the loan amount is estimated that would be €100 billion in total.

The Spanish authorities will present a formal request shortly to seek financial assistance from euro area Member States. The financial assistance is aimed at addressing the restructuring of its financial sector. Following the formal request, an assessment should be provided by the European Commission, in liaison with the European Central Bank (ECB), European Banking Authority (EBA) and the International Monetary Fund (IMF), as well as a proposal for the necessary policy conditionality for the financial sector that shall accompany the assistance. In addition, the Eurogroup considers that the Fund for Orderly Bank Restructuring (F.R.O.B.), acting as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned. The Spanish government will retain the full responsibility of the financial assistance and will sign the Memorandum of understanding (MoU).

José Manuel Barroso, President of the European Commission, welcomed the communication by Spain of its intention to request the support of the euro area for the restructuring of its financial sector, and the Eurogroup’s positive response to this. He also confirmed that this European institution is ready to proceed swiftly with the necessary assessment on the ground, in close liaison with the ECB, EBA and the IMF, and to propose appropriate conditionality for the financial sector.

As confirmed at the Eurogroup statement, the financial assistance would be provided by the EFSF/ESM for recapitalisation of financial institutions. The Eurogroup announced in March 2012 that the current overall ceiling for ESM/EFSF lending will be raised to €700 billion. The loan will be scaled to provide an effective backstop covering for all possible capital requirements estimated by the diagnostic exercise which the Spanish authorities have commissioned to the external evaluators and the international auditors. The loan amount must cover estimated capital requirements with an additional safety margin, estimated as summing up to €100 billion in total. On the other hand, the Eurogroup considers that the policy conditionality of the financial assistance should be focused on specific reforms targeting the financial sector, including restructuring plans in line with EU state-aid rules and horizontal structural reforms of the domestic financial sector.