A BATTALION of bean-counters is poised to descend on Madrid after Spain asked the world’s four biggest auditors to run a rigorous health check of its banking system.
Executives at FROB, Spain’s bank rescue fund, are poised to appoint PWC, Ernst & Young, Deloitte and KPMG to conduct a “granular” audit after a meeting in the Spanish capital on Friday. The focus will be Spain’s second-tier lenders and regional savings banks.
The move came as the Spanish prime minister called for a new fiscal authority to manage the eurozone’s troubled finances.
Mariano Rajoy said this would involve “transferring more sovereignty” to convince nervous investors that the single currency is an irreversible project. Spain is scrambling to avoid becoming the fourth eurozone member to seek a bailout. Concern over its banks last week pushed its cost of borrowing near 7%, the level that triggered rescues for Greece, Ireland and Portugal.
Madrid is pressing ahead with a debt auction this week in what will be seen as a key test of the confidence of international investors. Cyprus is also facing a race against time to avoid tapping the bailout fund after its cost of borrowing soared to an unsustainable 14%.
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On Wednesday, the European Central Bank is expected to cut growth forecasts. It will warn that the eurozone economy is set to shrink 0.3% in 2012 and grow only 0.7% in 2013.
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