EU officials look for ways to help Spain’s bank

Germany and EU officials are looking at ways to rescue Spain's debt-struck banks although Madrid has not yet  asked for assistance and is loathe to be placed under international supervision, European sources said today.

The euro zone's fourth largest economy, said yesterday that it was becoming increasingly difficult for it to access credit markets due to prohibitive borrowing costs and appealed to European partners to help revive its banks.

The European Central Bank (ECB) has, meanwhile, dashed expectations of easing of monetary policy or another flood of cheap liquidity for banks even as it said the euro zone money market had again become "dysfunctional". The ECB has put a hold on interest at 1 per cent at its monthly meeting.

The move added to the pressure on EU political leaders to present a solution to the bloc's continuing debt crisis at a summit to be held later this month.

According to Spanish economy minister Luis de Guindos there were no immediate plans to apply for a bailout. He added Spain would wait for the results of an IMF report and an independent audit of the banking sector, due later this month before deciding on how to recapitalise the banks.

ECB president Mario Draghi said financial markets were rightly worried about the future of the euro zone, though they had probably failed to accurately assess the political commitment behind  the single currency. He welcomed EU leaders' agreement to move ahead on a long-term vision for a full economic and monetary union.