European officials are weighing up a bailout programme for Spain that would aid its fragile domestic banking sector while imposing only “very limited conditionality” on Madrid, a concession that could make a reluctant Spanish government more willing to accept international assistance.
Unlike earlier bailouts for Greece, Portugal and Ireland, the proposed Spanish rescue would require few austerity measures beyond reforms already agreed with the EU and could even dispense with the close monitoring by international lenders that has proved contentious in Athens and Dublin, according to people familiar with the plans.
EU support would instead be contingent on increased external oversight and accelerated restructuring of the Spanish financial sector to address lingering concerns about political interference and cronyism in the cajas, the regional savings banks that loaded up on questionable property loans during the housing bubble.