AP

MADRID SPAIN could ask for a rescue of its troubled banks this weekend when European finance ministers hold an emergency conference call on Saturday to discuss its hurting lending sector, a move that would turn the nation into the fourth from the 17-nation eurozone to seek outside help since the continent’s financial crisis erupted two years ago.

The ministers will discuss a potential bailout for Spain as pressure mounted on the country to prop up the banks hurt by toxic assets after a property boom went bust.

A report from the International Monetary fund estimated Spanish banks need a recapitalisation injection of at least €40 billion ($50 billion) following a stress test it performed on the country’s financial sector. That report came out early Saturday, three days ahead of schedule, underscoring the urgency of the situation.

Spain as of early Saturday afternoon had not asked for help, “but we want to prepare if the call comes,” said Guy Schuller, a spokesman for Luxembourg Prime Minister Jean-Claude Juncker, who chairs the meetings of eurozone finance ministers.

Spanish officials neither confirmed nor denied a request for a bailout was imminent A phone call among senior officials on Saturday morning meant to prepare the finance ministers’ call ended without a formal request from Spain, an EU official said. He spoke on condition of anonymity because he was not authorised to release the information.

Spain’s Development Minister, Ana Pastor, did not tell reporters on Saturday whether the country would ask for a bailout but said: “What we’re working on at the moment is the recapitalisation of the financial entities that need it, nothing else” Spanish officials have taken pains to underscore that even if Spain were to seek a rescue, it should not be compared to those of Greece, Ireland and Portugal, which needed help to prop up public finances and in exchange were forced into economic supervision by the eurozone and the IMF.

“The Spanish government has to do what is necessary to support, strengthen and stabilise our financial system,” said Maria Dolores Cospedal, leader of Prime Minister Mariano Rajoy’s Popular Party.

News of the call came just one day after Spanish Deputy Prime Minister Soraya Saenz de Santamaria said the government would wait for the results of three reports, including the IMF one and two from independent auditors due no later than June 21, before acting.

But pressure was mounting on Spain to take action.

In an interview published Saturday, the head of Germany’s central bank, Jens Weidmann, called on Spain to tap Europe’s bailout fund, the EFSF, to prop up its banks.

“If Spain is overwhelmed by the financing need, it should use the instruments created for that case,” he was quoted as telling Germany’s Welt am Sonntag paper. “The motto cannot be to avoid using the rescue fund at all costs.” Juncker has also said the situation is coming to a head.

“The solution will have to be found quickly,” he told German public radio station Deutschlandradio.

Spain was hit Thursday with a downgrade of its credit rating to just two notches above junk by credit rating agency Fitch, which estimated Spanish banks may need as much as €100 billion ($124.7 billion). Then on Friday, Moody’s Investor Services warned it could downgrade Spain and other countries in the eurozone.

Moody’s said Spain’s banking problem is largely confined to that country and not likely to spill over to other eurozone nations, with the exception of Italy – where the European Central Bank has already stepped in to buy government bonds as a way to help lower the country’s borrowing costs.

Spain has been criticised for being too slow to set out a roadmap to resolve its problem.

European business leaders and analysts have stressed that Spain must find a solution quickly so that it is not caught up in any market turmoil sparked by the Greek elections on June 17. There are concerns that anti-bailout left-wing party Syriza could become the largest party in the Greek parliament, putting the country’s membership in the eurozone at risk.