Banking sector collapse pushes Spain, Cyprus closer to EU bailout | WPN World People News

Spain has signaled that the country may need a European Union bailout to rescue its collapsing banking system even as Cyprus too edged closer to a bailout.

"A bailout would not be the apocalypse," Jose Maria Beneyto, foreign affairs spokesman in Spain's Parliament said, adding. "You have to live with it."

Beneyto acknowledged that accepting a bailout would translate into salary cuts and pensions as dictated by the European Union, the European Central Bank and the International Monetary Fund. "Portugal is living with it relatively passively, and Ireland too," he added.

Beneyto's comments contradict a speech by Spanish Prime Minister Mariano Rajoy vowing that Spain would recover under its "own strength".

Meanwhile, Cyprus looked increasingly likely to ask for EU bailout money to help rescue its troubled banking sector.

The island's Central Bank governor Panicos Demetriades said that Cyprus is struggling to find $2.23 billion to inject in Cyprus Popular Bank, its second largest lender, by a June 30 deadline.

"Clearly, the closer you get to the deadline, the less unlikely (asking for EU bailout money) becomes," Demetriades told the Financial Times in an interview.

Cyprus President Demetris Christofias said his country had been engulfed by large exposure to Greece. "I don't want to absolutely exclude it," he said.

According to Germany's Der Spiegel magazine, German Chancellor Angela Merkel is actively pushing Spain into the arms of the EU bailout machinery.

Source: Spain News.Net