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“Spain formally requested European funds to help bail out its struggling banks,” reports CNBC. Luis de Guindos, the country’s Minister for the Economy and Competitiveness, wrote to Eurogroup President Jean-Claude Juncker to request financial assistance for Spanish banks in need of recapitalization. Although no specific amount was named, de Guindos said it should be enough to provide banks with a safety buffer of capital, as well as just recapitalize up to a sum of 100 billion euro. De Guindos added that the Spanish government expects to formalize all details of the proposed bailout by July 9 so that it could be discussed at the next Eurogroup meeting.
The Financial Times notes that the funds “will go to the state Fund for Orderly Bank Restructuring, which will direct the money to banks in need.” The process will be closely monitored by Spanish institutions, as well as the European Commission, the European Central Bank, and the International Monetary Fund. “As a condition of the bank bailout for Madrid,” the Times adds, “Spain’s eurozone partners are likely to require a deep restructuring of the Spanish domestic banking sector, which could involve the creation of one or more ‘bad banks’ to house property assets and the forced liquidation of insolvent institutions.”
Separately, the Wall Street Journal reports, “India’s central bank announced it will allow greater foreign investment in local bonds.” Foreign institutions were previously permitted to invest a cumulative $15 billion in Indian government debt, $20 billion in corporate debt, and $25 billion in long-term infrastructure bonds. On Monday, the bank lifted the investment cap on government bonds by $5 billion to $20 billion, while keeping the other limits the same. “The changes allow foreign investors to move an extra $5 billion into high-yielding Indian government paper,” notes the Journal.