“Today, the Treasury is practically the only one that finances itself on the markets,” he said in the Senate in Madrid today. Being locked out of debt markets isn’t “theoretical” as it’s “happening to the immense majority of regions, our whole financial sector and most big companies.”
Rajoy once again raised the threat of an international bailout as he seeks to convince Spaniards to accept spending cuts even as unemployment approaches 25 percent. His comments also underline the challenge the government faces as it tries to overhaul the banking industry without overburdening public finances.
Rajoy, in power since December, declined to answer a question from reporters as he left the Senate on how much public money may be needed to shore up Bankia, the lender with the biggest Spanish asset base and 38 billion euros ($49 billion) of real-estate assets.
Alfonso Alonso, the head of Rajoy’s People’s Party in Parliament, said today it seems “obvious” that Bankia will need help cleaning up its balance sheet after the Economy Ministry said it aimed to restructure the lender. Rodrigo Rato said yesterday he was standing aside as chairman of the group and proposed Jose Ignacio Goirigolzarri, former chief operating officer of Banco Bilbao Vizcaya SA (BBVA), as executive chairman.
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