Spain is about to become the latest European nation to ask for a bailout, but only for its struggling banks, not for the government itself, sources tell Reuters. Reuters is calling the approach a "bailout lite," one would put less strain on European rescue funds that may still be needed for Portugal and Ireland, come with only light political conditions, and wouldn't crush Spanish pride. Sources say the request will be made tomorrow afternoon.
"The government of Spain has realized the seriousness of their problem," one senior German official said. Spain will need about $11.2 billion to keep nationalized banks CatalunyaCaixa and NovaGalicia afloat, the deputy governor of the Bank of Spain told parliament yesterday, according to a source. When Fitch drastically slashed Spain's credit rating yesterday—from A all the way down to BBB—it estimated that it would cost $75 billion to $125 billion to recapitalize Spain's banking industry as a whole.