Germany's parliament gave bipartisan endorsement
Thursday for a 100-billion-euro (123-billion-dollar) bailout for
Spanish banks, clearing the way for Eurogroup finance ministers to
approve the loan.
Most of Chancellor Angela Merkel's legislators as well as
opposition Social Democrats and Greens backed the bailout by the
European Financial Stability Facility (EFSF). Of the 583 legislators
present, 473 voted in favour, 97 against and 13 abstained.
Mavericks in the main parties broke ranks. Among Merkel's 237
Christian Democratic and Christian Social Union supporters, 12
announced in advance to party leaders they would oppose the bill.
There were also dissenters in the junior coalition party, the Free
Democrats. One, Frank Schaeffler, warned, "The ground is being
prepared for direct aid." He said he would vote against the bailout.
"The market-economy system is being perverted," he added.
The government has spent most of the week denying claims that the
money may be lost if the banks collapse, insisting that the Spanish
government is committed to repaying it. Finance Minister Wolfgang
Schaeuble said no scheme to directly aid banks existed yet.
He stressed that there was still no eurozone agency in place to
bail out banks. One only be instituted by unanimous decision at a
European summit, with Germany's parliament having a veto.
"Only after such decisions could a European banking regulator be
built up and established with disciplinary power over distressed
banks," he said.
"Only when such a banking regulator with ECB involvement exists
can the question be discussed of financing the restructuring of
distressed banks, as initiated by the banking regulator, by European
mechanisms and institutions."
The minister, who was to represent Germany Friday at the Eurogroup
finance ministers' meeting, said Berlin supported a restructuring of
Spanish banks, saying, "We have a strong interest in Spain continuing
its fundamental economic reforms."
The parliament interrupted its summer recess to debate and vote on
the issue, with 94 per cent of the 620 members attending.
The opposition Left Party opposed the bailout, as did small
numbers of Social Democrats and Greens.
In Brussels, the European Commission denied that eurozone loans
could be used for buying Spanish government bonds - a step that would
reduce the country's high borrowing costs - as well as for rescuing
Spanish lenders.
Simon O'Connor, spokesman of EU Economy Commissioner Olli Rehn,
said there had been "a misunderstanding" after drafts of the Spanish
bank rescue deal were leaked in Berlin ahead of the Bundestag vote.
The sum that euro members have made available is "to recapitalize
the Spanish banking system ... not for other objectives. I don't
think I can be any clearer than that," O'Connor said.
A reference in the draft to the possibility of tapping into
eurozone funds for government bond purchases is there "purely for
informational purposes," O'Connor said, adding that Spain must file a
separate request if it wants to access that facility.
Borrowing costs for Spain meanwhile rose again. Although Madrid
raised 2.98-billion-euro in bond auctions, it came at a higher cost.
Two-and five-year bonds fetched yields of 5.2 and 6.5 per cent,
up from 4.3 per cent and 6.07 per cent in the previous auction in
June. Seven-year bonds had a yield of 6.7 per cent.
At the same time, the yield on 10-year bonds breached the critical
7-per-cent level after Thursday's bond sale.
dpa jbp sit alv amc mat bve
Authors: Jean-Baptiste Piggin, Sinikka Tarvainen, Andrew McCathie and
Alvise Armellini
191632 GMT Jul 12
