This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Spain's Ailing Banks Threaten Country's Finances

At least four other Spanish banks also need help.

The overall cost of bailing out Spain's troubled banks is somewhere between ⿬40 billion and ⿬100 billion. The International Monetary Fund is scheduled to weigh in with an evaluation of Spain's banking industry Monday. And the Spanish government has commissioned independent audits to determine the banks' recapitalization needs.

The Spanish government has pushed lenders to strengthen their finances by merging, and has told banks to set aside an additional ⿬84 billion by the end of 2012 to cover soured real estate assets. Spain's two largest banks ⿿ Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA ⿿ are expected to meet the stiffer requirements. But investors are fearful that some smaller banks won't be able to.

WHERE COULD THE BAILOUT MONEY COME FROM?

Spain has yet to map out how its banks â¿¿ in particular Bankia â¿¿ will be saved.

Spain could finance a bank bailout by selling bonds. But it's reluctant to take on a huge amount of debt when the interest rate investors would demand is perilously close to the 7 percent level that forced Greece, Ireland and Portugal to seek bailouts. That could turn Spain's banking crisis into a government-debt crisis, which so far it has been able to avoid.

Spain would like to get European aid for its banks but is reluctant to ask for it because under current rules the aid would have to be funneled through the government. That would also increase the country's public debt load and potentially send interest rates on its bonds higher.

Spain is trying to convince European leaders to let it have a "light" form of a bailout without directly asking for it. It hopes to find a little wiggle room in a measure approved by European Union leaders last July. That measure allows the EU to lend money for the purpose of recapitalizing banks in countries not already receiving bailouts.

3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,122.01 +15.31 0.09%
S&P 500 2,000.12 +0.10 0.00%
NASDAQ 4,569.6210 -1.0160 -0.02%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs