Spanish banks to seek $48.7b in ECB loans: Paper

A logo sits on display outside a Bankia SA bank branch in Madrid, Spain, on Friday, Jan 10, 2014. Spanish banks will seek around 30 billion euros (S$48.7 billion) in loans from the European Central Bank’s programme to spur lending to businesse
A logo sits on display outside a Bankia SA bank branch in Madrid, Spain, on Friday, Jan 10, 2014. Spanish banks will seek around 30 billion euros (S$48.7 billion) in loans from the European Central Bank’s programme to spur lending to businesses and households, Economy Minister Luis de Guindos said in an interview published on Sunday. -- PHOTO: BLOOMBERG

MADRID (REUTERS) - Spanish banks will seek around 30 billion euros (S$48.7 billion) in loans from the European Central Bank’s programme to spur lending to businesses and households, Economy Minister Luis de Guindos said in an interview published on Sunday.

“These loans will allow businesses and individuals to get credit on very competitive terms,” Mr De Guindos told La Vanguardia newspaper.

The ECB has embarked on the new cheap lending programme to try to get banks to lend more to revive economic growth in Europe. Many banks have been cutting back on lending as they strengthen their capital.

The first part of the ECB’s new bank funding plan is set for Sept 18 and a second slated for December aimed at supporting the flow of credit to businesses in the euro zone to stimulate growth.

De Guindos also said the Spanish government would likely seek to sell more shares in state-owned Bankia in mid-October. The ECB is due to publish the results of a Europe-wide health check of banks on Oct 17.

“We’ve still not decided what percentage, but the share price is already above the price of the last placing,” he said.

The FROB, a government body which manages Spain’s bank holdings, sold a 7.5 per cent stake of Bankia in February, kicking off a privatisation process showing renewed faith in Spain’s banking system.

Bankia’s shares closed on Friday at 1.53 euros per share, compared to the 1.51 euros per share price of the sale in February.

On Spain’s economy, Mr De Guindos said he expected it to grow 0.5 per cent quarter-on-quarter in the third quarter, driven by the service sector.

“With the latest data we see the industrial sector has lost a bit of momentum while the services sector is in a rapidly expanding phase,” he said.

The economy grew 0.6 per cent quarter-on-quarter in the second quarter. It is forecast to grow 1.5 per cent this year, making it one of the fastest growing economies in mainland Western Europe.