Spain's Jobless Near Five Million as Banks Await Cash

By: Associated Press
By: Associated Press

MADRID (AP) -- The number of people officially registered as unemployed in Spain has edged up toward 5 million as the country's recession shows few signs of abating and its struggling banks await crucial bailout cash.
Spain's Labor Ministry said Tuesday that unemployment rose a monthly 74,296 in November, or 1.5 percent, to a record 4.9 million. The country's unemployment rate is released separately and quarterly. It stood at 25 percent at the end of the third quarter, with the youth unemployment rate standing well above 50 percent.
The figures come a day after finance ministers from Spain's euro partners approved the release of (euro) 39.5 billion ($51.6 billion) in bailout aid for Spanish banks worst hit by the property market collapse in 2008.
The funds are part of a (euro) 100 billion rescue package earmarked for Spain's banks that was agreed with the other 16 European Union countries that use the euro back in June. The loan package is designed to ease the pressure on the Spanish government so it can concentrate on managing the national finances as well as those of the regions and avoid a full-blown sovereign bailout.
The (euro) 39.5 billion figure includes (euro) 37 billion in loans for four banks already nationalized by the Spanish government. The money is to begin arriving next week. Under the deal, Bankia will get (euro) 18 billion, Catalunya Caixa (euro) 9 billion, Novagalicia (euro) 5.5 billion and Valencia Bank (euro) 4.5 billion.
In return, the entities must reduce the size of their business by 60 percent, branch numbers by 50 percent, stop lending to real estate development and concentrate on retail loans and those to small and medium-sized companies in their base regions.
"The implementation of the program is on track," said Jean-Claude Juncker, the Luxembourg prime minister who heads the eurogroup of finance ministers.
The ministers also approved (euro) 2.5 billion to help fund Sareb, Spain's recently set-up bad bank.
Many analysts think that Spain's banks will need much more over the months ahead to deal with their myriad of problems. In September, an independent audit commissioned by Spain estimated that the country's troubled banks would need (euro) 60 billion to survive a serious downturn.
"One can't help feeling that the amount being asked for could be one of many requests over the coming months," said Michael Hewson, markets analyst at CMC Markets. "With the aid being conditional on sweeping job cuts in excess of 6,000, and bank branch closures across the country the effects are likely to be felt across the entire Spanish economy, which is already seeing tax revenues shrink sharply."
Another four banks -- Mare Nostrum, Banco Caja 3, Liberbank and Ceiss -- were found in audit to be not fully capable of surviving a serious economic downturn. They are due to present restructuring plans before Dec. 20 in order to receive rescue funds. On Monday. Spanish Economy Minister Luis de Guindos applied to the eurozone for (euro) 1.5 billion for these banks.
In a positive signal for Spain's deficit-reduction efforts, the country's 17 semiautonomous regions managed to improve their finances in the first nine months of the year.
The Finance Ministry said their joint deficit stood at 1.14 percent of Spain's gross domestic product at the end of September. In the same period last year, it was 2.2 percent and ended 2011 at 3.3 percent, contributing to Spain's debt woes. The central government has set them a target of 1.5 percent for 2012.

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  • by Flex Location: New York on Apr 10, 2013 at 01:30 AM
    My friend moved from Spain to New York becouse it was a big hell problem to find a work after university,in Spain its normally to get a work place through relatives and friends.Sorry, but I think the main problem in Spain is that nation don't work as diligently as they have to, no culture of work,but they are very funny and very simple to communicate with! Of course, here there also the almost the same problems and as it was said they almost forced to take credits and payday loans, but I believe that everything will be ok! Let's see...
  • by Audrey Location: NY on Mar 1, 2013 at 06:19 AM
    It’s awful that there are so many unemployed people in Spain, the situation is really tough. I have thought that the worst part of the crisis has left behing but everything is still very difficult. People take their savings away from banks because they don’t feel confident in any financial institutions and need to stay afloat. Also lots of people live through loans and apply to no fax payday loan lenders because they need to cover basic daily expenses. I really hope that soon the situation will change into the better and Spanish economy will start to recover.
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