print Share page with AddThis


Prior to 2008
Housing bubble and construction boom
Bubble bursts; banks suffer loan losses; economic recession
Spanish government starts bank restructuring
Bank restructuring completed
Spain achieves 3.2% economic growth

Spain: a fast and effective programme

Spain is a good example of the success of ESM assistance programmes. The country has one of the highest growth rates in Europe. The ESM conducted the programme on its own: there were no other creditors. The support enabled Spain to restructure its banking sector. The programme lasted 18 months, much shorter than the other ESM and EFSF programmes.

The ESM assistance package for Spain was unlike those of other programme countries. The money was used for just one purpose: restructuring the country’s banks. The programme was also the smallest as a share of a country’s economy.

Spain’s problems became visible in the housing market. In the decade before the crisis, the country was flourishing. The economy grew much faster than the rest of Europe and employment was strong. There was also a massive construction boom. House prices nearly tripled between 1997 and 2008. The bubble was fed by easy loans from banks. When the credit crunch hit, real estate prices collapsed. Banks were left with huge losses, as clients struggled to repay mortgages.

The country entered a recession in 2011, which affected the livelihoods of many. The budget deficit rose to 11 percent of GDP in 2009. Banks lost the ability to borrow money or raise capital. The savings banks, or cajas, were the weakest. Without support, many would have collapsed. With the budget already stretched, the government had little room to manoeuvre. While Spain never lost access to market financing, raising money became increasingly expensive. In a bid to calm uncertainty, and quickly address the banking issues, Spain requested assistance in July 2012.

The ESM made available to Spain up to €100 billion in assistance, although, in the end, it only needed €41.3 billion. Two disbursements were made: in December 2012 and in February 2013. The funds were lent to the Spanish government – no ESM cash was disbursed directly to the banks.

Spain’s banking crisis was centred on the savings banks. In return for the financial assistance, Spain modernised the sector, a process that had already started before the programme. Ownership structures were reformed, and risk management practices were improved.

Spain successfully exited its programme in December 2013 and gave a strong signal of returning to normal by voluntarily starting to repay the ESM loans earlier than required.

Financial assistance for the recapitalisation of the Spanish banking sector

Date of Disbursement Amount disbursed Cumulative amount disbursed Average maturity of loan Final maturity
11/12/2012 €39.468 billion €39.468 billion 12.5 years 11/12/2027 *
05/02/2013 €1.865 billion €41.333 billion 12.2 years 11/12/2022 **

Weighted average maturity: 12.5 years
*Constant amortisation between 2022 and 2027 of €5.64 bn per year (amount adjusted following loan prepayments).
**Constant amortisation between 2024 and 2025 of €933 million per year.


Details of the notes provided by ESM

ISIN Issuance date Maturity Type Amount
EU000A1U98X6 01/02/2013 05/08/2015 30 month FRN €1.865 billion
EU000A1U97C2 05/12/2012 11/02/2013 2 month Bill €2.5 billion
EU000A1U97D0 05/12/2012 11/10/2013 10 month Bill €6.468 billion
EU000A1U98U2 05/12/2012 11/06/2014 18 month FRN €6.5 billion
EU000A1U98V0 05/12/2012 11/12/2014 2 year FRN €12 billion
EU000A1U98W8 05/12/2012 11/12/2015 3 year FRN €12 billion


Loan repayments

Date of repayment Amount repaid Cumulative amount repaid Details
08/07/2014 €1.304 billion €1.304 billion Early repayment (voluntary)
23/07/2014 €0.308 billion €1.612 billion Scheduled repayment of unused funds
17/03/2015 €1.5 billion €3.112 billion Early repayment (voluntary)
14/07/2015 €2.5 billion €5.612 billion Early repayment (voluntary)
11/11/2016 €1 billion €6.612 billion Early repayment (voluntary)


Related documents

Legal documents

Review documents published by the European Commission


  • €41.3 billion
    amount ESM disbursed to Spain
  • 8
    number of Spanish banks recapitalised thanks to ESM funds
  • 12.5 years
    Weighted average maturity of ESM loans to Spain
  • 2025
    Date when Spain starts to repay its ESM loans. All payments due until 2027
  • €6.6 billion
    amount of ESM loans repaid early and voluntarily by Spain
  • 0.9%
    Average interest rate on ESM loans to Spain (as of 31/12/2015)
  • 3.2%
    Spain’s estimated GDP growth in 2015 and 2016


ESM assistance was key in cleaning the balance sheets of troubled banks, improving their capital base, and overcoming market fears about the depth of the problems in Spain’s financial sector.

Spain was scheduled to repay the loan principal from 2022 to 2027. However, starting in July 2014, the Spanish government made the first in a series of early repayments to the ESM. To date, Spain has repaid €5.6 billion (out of the total loan amount of €41.3 billion).

No, the IMF did not make a financial contribution because unlike the ESM, it does not have a financial assistance tool related to bank recapitalisation. The IMF was only involved in an advisory and monitoring capacity.

Yes, the European Commission was closely involved in the bank recapitalisation process and approved the state aid for the recapitalisation of the banks concerned.

In the case of Spain, conditions were strictly directed to the banking sector. There were three main conditions: first, identifying individual bank capital needs through an asset quality review of the banking sector and a bank-by-bank stress test. Second, recapitalising and restructuring weak banks based on plans to address any capital shortfalls identified in the stress test. Finally, problematic assets in those banks receiving public support (without any credible plans to address their capital shortfalls by private means) were to be segregated and transferred to an external asset management company (Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria – SAREB).

In addition, conditionality was also applied in order to strengthen the banking sector as a whole. This included regulatory capital targets, bank governance rules, an upgrade of reporting requirements and improved supervisory procedures.

Subscribe to ESM News