Europe, Bailouts | featured news

Spain's government said Friday it plans to make its official request for EU aid for its banking sector Monday, as discussions continue on ways to inject European aid funds directly into ailing Spanish banks.

Greece's new government promised on Thursday to renegotiate the terms of the country's bailout without endangering its future in the euro, responding to intense pressure to ease mounting social tensions but also risking a showdown with European powers.

Spain's banks would need 51-62 billion euros ($64-78 billion) in extra capital to weather a serious downturn in the economy, less than a 100-billion-euro aid package offered by the euro zone, independent audits showed on Thursday.

Greece's new government is to ask lenders for two more years to hit fiscal targets, responding to huge public pressure for a softening of an international bailout but setting up a showdown with its euro zone partners.

European leaders faced increasing pressure on Thursday to respond to the euro crisis, as Spanish bond yields hit a level that has triggered full bailouts of other nations.

Spain’s borrowing costs soared Tuesday to levels that have sent other euro members into the arms of international lenders, calling into question the viability of a bailout deal for Spain’s banking sector even as other troubled countries were weighing whether they could make similar rescue arrangements.

Europe agreed Saturday to allow Spain to tap a rescue fund of up to (EURO)100 billion ($125 billion) to bail out its troubled banks, which are struggling under the weight of soured real estate loans after a Spanish housing bubble burst. Spanish Economy Minister Luis de Guindos said the country will reveal how much money it needs within coming weeks, after audits of its financial sector are completed.

The International Monetary Fund says it has not been asked by Spain for a bailout and has not begun preparing one.

Students are protesting on Barcelona's elegant boulevards, public-sector wages are being cut for the second time in three years and resentment is growing against the central government and beneficiaries of bank bailouts.

Let Greece go: It's a possibility that's being considered more and more publicly in Europe. There have been two and a half years of bailouts, on top of broken promises by Greece to reform. The result: a fifth year of recession and, this week, political chaos. Voters on Sunday favored parties that either oppose the terms of the country's international bailout or want to renegotiate them. If it cannot get more rescue loans, Greece will go bankrupt and likely have to leave the eurozone, the currency union of 17 countries.