European Commission considers aid for Spanish banks

The European Commission is considering offering Spain direct aid from the eurozone rescue fund to recapitalise distressed banks, as the country's government bond yields approach record highs.

The Commission also said Spain could have another year to reduce its budget deficit. Concern about Spanish banks and the state of the nation's debt has deepened in the past month and shares in Bankia, the part-nationalised bank, were suspended amid bailout requests. EU Economic and Monetary Affairs Commissioner Olli Rehn said Brussels was ready to give Spain an extra year until 2014 to bring its deficit down to the EU limit of 3% of GDP, according to Reuters. However, it would require Madrid to present a solid two-year budget plan for 2013-14. Direct aid for banks from the European...