IMF: Spanish banks need nearly $50 billion

The International Monetary Fund is estimating that Spanish banks need at least a euro40 billion (nearly $50 billion) capital injection following a stress test it performed on the country's financial sector.

Germany and Spain are both digging in their heels.

After months of denials, a short Eurogroup Statement shows Spain will submit a formal request to Brussels for a bailout.  Here is the statement in full. The Eurogroup supports the efforts of the Spanish authorities to resolutely address the restructuring of its financial sector and it welcomes their intention to seek financial assistance from euro area Member States to this effect.

Marc Chandler submits:Stress Test Update: The latest indication is that next Friday the results of the European bank stress tests will be reported in some aggregate (perhaps country level) with details for individuals banks expected in the following couple of weeks.

By Marc Chandler:Spanish officials will likely find comfort in the results of the latest stress tests. They can still feel as if the 100 bln euro line from the EFSF/ESM (European Financial Stability Facility/European Stability Mechanism) will be more than sufficient. In fact, a formal request for the funds may be made within days.

Spanish Prime Minister Mariano Rajoy on Saturday vowed reforms to make the economy "more flexible and competitive", a day after an IMF warning following a huge bailout for Madrid's stricken banks.In a hard-hitting report less than a week after the eurozone agreed on a banking rescue of up to 100 billion euros ($126 billion) for Spanish banks, the International Monetary Fund Friday listed a string of needed reforms to regain market confidence.

Spain's banks need at least 40 billion euros (about $46 billion) in fresh capital to preserve the country's financial stability, the International Monetary Fund said Friday in an eagerly-awaited report.

Several banks in Spain would need to raise capital buffers by a total of €40 billion to withstand another financial shock, the International Monetary Fund said in a report issued late Friday.