By Jess Aguado and Emma Pinedo
MADRID (Reuters) – The Spanish government approved on Tuesday a burden-sharing scheme for banks as part of state-backed credit lines to help companies limit the impact of the coronavirus outbreak and released an initial tranche of 20 billion euros ($21.6 billion).
The measures are part of a total of 100 billion euros in state-backed credit lines approved last week, embedded in a wider, unprecedented 200 billion euros package.
“The government hopes that these measures will help companies to better weather the negative effects triggered by this health emergency,” government spokeswoman Maria Jesus Montero said.
As part of the scheme, the state will guarantee around 80% of unpaid loans by small and medium-sized companies and self-employed workers.
The guarantees will cover new or renewed lending but not restructured loans.
With nearly 40,000 coronavirus cases and 2,696 deaths, Spain is Europe’s worst-hit country after Italy.
Banks have been awaiting the details before starting to grant loans to businesses that have already started to temporarily lay off thousands of employees to withstand a near stand-still in activity.
European governments are separately scrambling to put together additional spending packages, while regulators loosen rules on bank capital to spur lending.
The European Central Bank has promised emergency action to buy more than a trillion euros in bonds to support the economy and is offering loans for banks to pass on to small businesses.
(Reporting by Jesus Aguado and Emma Pinedo; additional reporting by Belen Carreno; editing by Andrei Khalip and Barbara Lewis)
