European bailout funds will pump €35bn (£28.3bn) into Spain’s state bank rescue package in return for mass job cuts at four nationalised banks, including state-rescued Bankia, as eurozone finannce ministers meet for the third time to agree on Greek aid.
The cash injection will be transferred to troubled Spanish banks two weeks after it is paid into Spain’s restructuring fund on December 15, according to El Pais newspaper.
Under the agreement, Bankia, which sought a €23.5bn bailout from the state in May, is expected to be forced to lay off up to 6,000 people from its current 20,000 staff. Elsewhere, NovaGalicia Bank is to lay off 2,000 staff - almost a third of its workforce, sources said.
Both banks would have to close 1,000 branches between them, it is understood, although they declined to comment.
The other two nationalised lenders, Catalunya Caixa and Banco de Valencia, are currently being sold off and conditions would reportedly be imposed on the buyers.
The payment will be the first since the Spanish government was granted up to €100bn in June, in a European bailout of the banking sector.
The move came as Catalans began voting today on whether to take a step towards independence for the region, risking the country’s fragmentation and weakening Spanish prime minister Mariano Rajoy.
The prospect of a break-up of Spain sparked an open conflict with Madrid and overwhelmed debate about the region’s sky-high public debt, savage spending cuts, unemployment and recession. An independent Catalonia seems far off, however.
Efforts to resolve the European debt crisis will surface again tomorrow as eurozone finance ministers try for the third time to clear an aid payment to Greece.
Finance chiefs from the 17-member single currency return to Brussels, less than a week after an all-night meeting failed to yield agreement and days after a EU summit broke up without a proposed seven-year budget.
The Eurogroup said after last week’s meeting that progress had been made, but more time was needed to complete technical work.
Ahead of the meeting, Euopean Central Bank board member Joerg Asmussen told Germany’s Bild newspaper that a write-down on Greek debt should not be part of the country’s next rescue package, adding that everyone must show a “willingness” for the rescue package to succeed.