Spanish banks which receive public loans in the form of convertible shares as part of an up to 100 billion euros financial package will be charged an interest rate of at least 8.5 percent, a European Commission spokesman said on Tuesday.
Spain's Economy Minister Luis de Guindos said on Saturday that the Spanish bank restructuring fund (FROB) would inject the European loans into banks though convertible shares, also known as Cocos, or through equity.
I would hate to see what these Spanish banks would have to charge in loans in order to pay off this interest? Hell I wouldn't buy a car if I was charged an 8.5% rate. That is what you are charged if you have poor/no credit.
You would figure the EU would charge a lower rate than Spanish government debt so the banks can do some carry trades with the money. So the EU would charge like 4.5% and the banks then buy Spanish Government Bonds that pay 6.7%. They then pocket the difference in order to strengthen their earnings and prop up the Spanish Debt market.
Oh well, I guess the EU technocrats in Berlin know what they are doing and I guess they would rather not throw any more good money after bad. It just smacks of ripping off these Spanish banks.
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