FXstreet.com (San Francisco) - The draft of the Memorandum of
Understanding on Financial-Sector Policy Conditionality (MoU) said
that "The main objective of the financial sector programme in Spain
is to increase the long-term resilience of the banking sector as a
whole, thus, restoring its market access," and to reach this target
Spain is called to reforms its financial system and complete
structural reforms in the terms of 2 year. The Aid will be released
in the next 18 months (€100B as top).
The memo provides more powers to the Banco de España instead of
Financial Ministry De Guindos in order to have a more independent
central bank. The MoU also recommends the creation of another
independent institution to regulate the whole tax policy in the
Kingdom of Spain.
"The key component of the programme is an overhaul of the weak
segments of the Spanish financial sector," says the draft. "It will
be comprised of the following three elements:"
· Identification of individual bank capital needs through a
comprehensive asset quality review of the banking sector and a
bank-by-bank stress test, based on that asset quality review
· Recapitalization, restructuring and/or resolution of weak banks,
based on plans to address any capital shortfalls identified in the
· Segregation of assets in those banks receiving public support in
their recapitalization effort and their transfer of the impaired
assets to an external Asset Management Company (
"These amendments should also include provisions allowing that
holders of hybrid capital instruments and subordinated debt fully
participate in the SLEs." Capital ratio requirement in banks will
be the 9% at least until 2014.
The Rajoy's government is commitment to "present by end-July a
multi-annual budgetary plan for 2013-14, which fully specifies the
structural measures that are necessary to achieve the correction of
the excessive deficit."
Regarding structural reforms, "the Spanish authorities are
committed to implement the country-specific recommendations in the
context of the European Semester" as follow:
1) Introduce a taxation system consistent with the fiscal
consolidation efforts and more supportive to growth,
2) Ensure less tax-induced bias towards indebtedness and
3) Implement the labour market reforms,
4) Take additional measures to increase the effectiveness of active
labour market policies,
5) Take additional measures to open up professional services,
reduce delays in obtaining business licences, and eliminate
barriers to doing business,
6) Complete the electricity and gas interconnections with
neighbouring countries, and address the electricity tariff deficit
in a comprehensive way.
Troika seems to be busy with Spain in the next years as it is with
Greece. "Spanish authorities will regularly submit or update, at
least on a weekly or monthly basis," and the "The European
Commission, in liaison with the ECB and EBA, will verify at regular
intervals that the policy conditions attached to the financial
assistance are fulfilled."