Spain awaits bank audit before agreeing bailout

Spain will await the results of two audits of its stricken banks before finalizing a request for European funds to aid in their recapitalization, Prime Minister Mariano Rajoy said. Spain came under pressure from the leaders of the world's most powerful economies at the G20 summit in Mexico to move quickly to resolve its debt crisis, which has threatened the stability of the entire eurozone financial sector. But, before leaving the annual get-together, Rajoy said his government was still in the process of negotiating the "memorandum" governing a deal that it only accepted reluctantly and still refuses to refer to as a bailout. On June 9, Spain's government made an agreement for its eurozone partners to extend a rescue loan of up to 100 billion euros ($125 billion) to salvage its crisis-hit banks but, ahead of the deal, Madrid had requested two audits. The first, due by Thursday, inspected banks' balance sheets and is expected to reveal how much capital they require to be able to withstand financial stress. That audit is being conducted by consultants Roland Berger of Germany and Oliver Wyman of the United States. A second, more detailed study to be carried out by Deloitte, KPMG, PwC and Ernst & Young, is to look at the valuation of banking assets, which have plunged in value along with the real estate sector. The result of this second study is expected "around July 31", a finance ministry spokesman told AFP. Spain will not finalize the details of the refinancing plan until the audits are complete.