Finland PM: Spanish Bailout Can’t Go to Unhealthy Banks

[marmar]

(Bloomberg) Finland doesn’t want any of Spain’s bailout to prop up unhealthy lenders and expects some troubled banks to be split up as the northernmost euro member outlines the conditions it understands are attached to the rescue deal agreed on June 9.

“The unhealthy banks should be brought down or some banks should be possible to chop up” so that the healthy parts continue and the rest ends in a so-called bad bank, Finnish Prime MinisterJyrki Katainensaid in an interview in Norway today. “There must be a possibility to restructure the banking sector because it doesn’t make sense to recapitalize banks which are not capable of running.”

Spain this weekend became the fourth euro member to seek a bailout as the bloc’s finance ministers agreed to provide as much as 100 billion euros ($126 billion) to save the country’s banks. Katainen said today his government is unlikely to need collateral in exchange for its backing as the funds will probably come from the permanent European Stability Mechanism, which gives official creditors seniority over existing bondholders.

“Hopefully the ESM will be in force” by the time Spain’s bailout funds start flowing, Katainen said. “It would be simpler and better in many ways and I have understood that the majority of the euro-area countries would support using the ESM instead of” the European Financial Stability Facility, which entitles Finland to collateral, he said. ............(more)

The complete piece is at: http://www.bloomberg.com/news/2012-06-11/spanish-bailout-can-t-go-to-unhealthy-banks-finland-says.html

[DCKit]

1. Doin' it like Iceland: Let the banks fail, let the creditors go begging.

What a breath of fresh air.