Bailout request closer, sources suggest

Spain is expected to request a bailout to its European partners on Saturday, say sources quoted by Reuters. If confirmed on Saturday’s conference call amongst the finance ministers of the 17 member-states to the Euro’s currency area, the bailout request would come only two days after Fitch Ratings downgraded Spain’s sovereign credit rating on Thursday.

A Spanish bailout would be the fourth in the embattled Eurozone, after Greece, Ireland and Portugal, all of which got financial assistance from the European Union, the European Central Bank and the International Monetary Fund. None of those aid packages have been able to placate the crisis that has spread throughout the old continent, threatening the Euro itself as a currency, as well as the Eurozone’s existence, while looming large over the world’s economy.

From Reuters:

There was no immediate official comment from the Spanish government. The EU and German sources spoke on condition of anonymity due to the sensitivity of the matter.

Fitch said the cost to the Spanish state of recapitalising banks stricken by the bursting of a real estate bubble, recession and mass unemployment could be between 60 and 100 billion euros ($75 and $125 billion).

An International Monetary Fund report, due to be published on Monday, is expected to estimate Spanish banks’ capital needs at a lower figure of 40 billion euros, but market conditions have deteriorated since that data was collected, officials said.