DPA

BRUSSELS/MADRID SPAIN needs other euro area partners to agree on a banking union to get out of its financial crisis, Finance Minister Cristobal Montoro said on Tuesday, but he did not clarify whether that would comprise direct aid for its banks.

The banking union idea was launched last week by the European Commission and the European Central Bank. It would require all 17 euro members to jointly underwrite bank deposits, devise common schemes to deal with failed banks and agree on joint supervision.

In an interview with Onda Cero radio, Montoro said “the sums that the Spanish banking sector needs to recapitalize itself are not very high, they are not excessive.” “The question is the procedure, where that money will come from, and that is why it is so important for European institutions to act” so that they can “facilitate” the task, the minister said.

A decision in this sense should be adopted at the next EU summit on June 28- 29, he added.

A debate is ongoing on whether the banking union reform should include a rule change for the European Stability Mechanism, the eurozone’s new bailout fund, allowing it to directly rescue banks without first needing a formal bailout request by a government.

Montoro stuck to the government’s line that Spain “does not need” a full EU bailout, despite acknowledging, in reference to recordhigh borrowing costs, that “at the moment we have a problem with access to the markets.” He also rejected suggestions that Germany was pressing Madrid to seek outside aid. “No, that is not the case,” he said.

What is needed is “measures that provide for more Europe ... not measures to rescue anyone but to bring about a European banking union, so that we have a European financial system with the same supervision, with the same guarantees for all,” the minister said.