Spain said today it would immediately increase bank deposit guarantees to boost confidence in the financial system, after prime minister Jose Luis Rodriguez Zapatero summoned top bankers to a crisis meeting.
"Zapatero informed the heads of the leading banks and savings banks of the measures the government will adopt immediately to increase deposit guarantees to reinforce confidence among citizens, savers and businesses," a statement from the Prim Minister's office said.
The statement gave no financial details, but previously the deposit guarantee level in the euro zone's fourth biggest economy was €20,000 euros, which is the minimum under European Union law, and backed by reserves.
Represented at the two-hour meeting were the eurozone's largest bank Santander, as well as BBVA, Banco Popular and unlisted savings banks La Caixa, Unicaja and Caja Madrid.
Earlier in the day, economy minister Pedro Solbes voiced his frustration at the lack of a coordinated approach among European Union members to solving the global banking crisis.
"If there isn't (an EU agreement) as soon as possible, we will consider our position and if we have to take a decision we will do so," Mr Solbes said, when asked whether Spain would follow the lead of other countries and provide full coverage on deposits.
Pressure is building for governments throughout Europe to provide unlimited coverage of deposits after Germany pledged to do so yesterday, prompting Austria and Denmark to follow suit.
The moves, started by Ireland last week, pose a challenge for the rest of Europe, since banks have become increasingly cross-border and savers transfer funds wherever they think they are safest.
"I would have preferred no member country took decisions unilaterally, which are always negative," Mr Solbes said. "If each country maintains its position, we'll have to look at the impact it's having on Spain."
Strict Bank of Spain reserve and investment regulations have shielded the Spanish banking system from the initial impact of the international financial crisis.
Banks now face liquidity difficulties as the crisis drags on and domestic debt defaults rise following the collapse of a decade-long residential construction and property boom in Spain.
Mr Zapatero will meet with French president Nicolas Sarkozy in Paris on Friday to discuss the international financial crisis, after officials said Spain was annoyed at being left out of a weekend "mini-summit" in France.
Socialist Zapatero's meeting with banking leaders followed a report in Spain's La Vanguardia newspaper that the government was considering buying debt from some Spanish banks to help ease their liquidity problems.
Mr Solbes has said he supports limited public intervention in the financial system when necessary.
Reuters