ECB investigating if loans made to Spanish banks contravened rules

European Central Bank (ECB) officials are investigating claims that they have blundered and advanced money to Spanish banks on generous rather than penal terms.

It is thought they may have breached the tough austerity sanctions imposed on a beleaguered economy, making it easier for the government to resist pressure for a full scale bail-out.

German newspaper Die Welt am Sonntag, citing the results of its own research, said Spanish banks had borrowed funds from the ECB at a preferential interest rate of 0.5pc even though the creditworthiness of the T-bills they provide as collateral should have required them to pay 5.5pc.

The €80bn (£64bn) issue of 18 month treasury bills had been wrongly classified as carrying a top A rating when some of them were 'completely ineligible’ as collateral under ECB rules, it is claimed.

The blunder charge has been levelled at the ECB in Germany following an investigation into the way the bank has been attempting to ease the eurozone crisis through its offer to buy unlimited amounts of debt from the states under the greatest pressure to help them reduce borrowing costs.

“Dealings with certain Spanish government bonds casts doubt on the quality of the ECB’s risk management,” said Die Welt , reflecting German criticism of the ECB’s tactics.

Spain has been reluctant to join the EU 'bail-out’ club because of the additional burdens on an economy in deep recession but there are reportedly growing signs that attitudes are changing and eurozone sources are anticipating Spain will seek extra help later this month.

Prime Minister Mariano Rajoy has not ruled out seeking a bail-out but has indicated he will not be rushed unless there was a significant deterioration in market conditions.