Make no mistake – this is a rescue of the Spanish state, but in a roundabout way to reassure the common investor. The State can’t afford to bail out its banks, and so has had to ask for a rescue.
Spain was keen to ensure that any assistance went directly to its banks, rather than to the central government. As a result, the loans will go to its bank restructuring agency, called FROB. But this would still considered state debt, Mr de Guindos said.
The Eurogroup said it “considers that the Fund for Orderly Bank Restructuring, FROB, acting as agent of the Spanish government, could receive the funds and channel them to the financial institutions concerned. The Spanish government will retain the full responsibility of the financial assistance”.