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Spain formally asks for bank rescue

The country has yet to specify how much of the $125.39 billion loan package offered by the 17 countries that use the euro it will ask for.

twitter-logoAssociated Press | June 25, 2012 | Updated 21:33 IST

Spain has made a formal request for a loan to help clean up its troubled banking sector, the Economy Ministry said on Monday.

However, the country has yet to specify how much of the $125.39 billion loan package offered by the 17 countries that use the euro it will ask for. Economy Minister Luis De Guindos said recently the figure will be made known on July 9 when Spain and its single currency partners reach agreement on the terms of the loan, such as the interest rate.

Last week, two international audits commissioned the government said that Spain's banks could need up to $77.7 billion to survive if the economy were to suffer an extreme deterioration.

Spain earlier this month finally admitted that some of its banks were in severe trouble owing to the build-up of toxic assets following the collapse of the country's bloated real estate sector after 2008.

The letter to the euro area governments requesting the loan said the amount sought "would be sufficient to cover capital necessities as well as an additional margin of security up to a maximum of 100 billion euros."

It was sent to Jean-Claude Juncker, the Luxembourg Prime Minister who is also president of the eurogroup of finance ministers.

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