Spain

ESM's second disbursement to Spain

On 5 February 2013 the ESM disbursed €1.865 billion to Spain for the recapitalisation of the country's banking sector. The financial assistance will be initially financed on a back-to-back basis by one initial funding instrument - a floating rate note (details in table below). The assistance will be used for the recapitalisation of the following banks: Banco Mare Nostrum, Banco Ceiss, Caja 3 and Liberbank.

ESM’s first disbursement of financial assistance

On 20 July 2012, the Eurogroup granted financial assistance to Spain's banking sector following an official request made by the Spanish government. The objective is to recapitalise the Spanish banking sector and restore market confidence in Spain.

The assistance granted by the Eurogroup is designed to cover the estimated shortfall in capital requirements along with an additional safety margin, which will cover financing needs of up to €100 billion. The loans will be provided to the Fondo de Restructuración Ordenado Bancaria (FROB), the bank recapitalisation fund of the Spanish government, and then channelled to the financial institutions concerned.

On 3 December 2012 the Spanish government formally requested the disbursement of close to €39.5 billion of funds. On 5 December 2012 the ESM launched and priced notes, which were transferred to the FROB on 11 December 2012. This marks the first instance of financial assistance provided by the European Stability Mechanism (ESM), the euro area’s permanent rescue fund.

The FROB will use these notes for the recapitalisation in an amount close to €37 billion of the following banks: BFA-Bankia, Catalunya-Caixa, NCG Banco and Banco de Valencia. Additionally the FROB will provide up to €2.5 billion to SAREB, the asset management company for assets arising from bank restructuring.

The financial assistance will be accompanied by policy conditionality focused on the banking sector. The conditionality consists of bank-specific measures, including in-depth bank restructuring plans in line with EU state aid rules and sector-wide structural reforms. Reforms concerning the governance, supervision and regulation of the financial sector will also be implemented. In parallel, Spain will have to comply fully with its commitments and obligations under the Excessive Deficit Procedure and the recommendations to address macroeconomic imbalances within the framework of the European Semester.

The assistance was initially financed by the EFSF and then transferred to the ESM (without applying seniority status). Loan maturites will be up to 15 years with an average of 12½ years.

Financial assistance for the recapitalisation of the Spanish banking sector (max. total committed: €100 billion)

Details of the notes provided by ESM