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Portugal under heavy EU pressure to seek financial aid
Date 28/03/2011 15:17  Author webmaster  Hits 1103  Language Global
28 MAR 2011

• Ireland's ailing banks expected to unveil black hole of €25bn
• Spain's regional savings banks need to raise €15bn


By Zoe Wood | The Guardian

The pressure on Portugal to succumb to an EU bailout intensified ahead of a week when Spain and Ireland's troubled banking systems will face fresh scrutiny.

European Central Bank governing council member Ewald Nowotny said it made sense for Portugal to turn to the EU for financial aid: "From a purely economic point of view one could probably recommend it. The domestic political situation in Portugal has clearly worsened … the head of the government has stepped down," he said in an interview with Austrian broadcaster ORF.

Last week Portugal's prime minister José Sócrates resigned after his minority Socialist government failed to get its latest round of austerity measures through parliament. The country must refinance €4.5bn (£3.9bn) of debt in April and is now expected to be the next domino in the eurozone to fall, following in the footsteps of Ireland and Greece. Jean-Claude Juncker, the chairman of Eurogroup, said he thinks Portugal would need an aid package worth €75bn.

The after shocks of the financial crisis continue to reverberate throughout Europe with Spain and Ireland's bombed out banking systems in the dock this week.

Monday is the deadline for Spain's regional savings banks or "cajas" to tell the Bank of Spain how they will boost capital reserves to meet the new minimum levels set by the government.

As in Portugal, the Spanish government is desperately trying to avoid an international bailout and has ordered the unlisted cajas to get private capital on board by either stock market listings or through equity investment – otherwise they will face nationalisation.

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See also:
Crisis-hit Portugal encouraged to accept eurozone`s bail-out package (The Telegraph)