Paper claims ECB breaking rules with Spanish loans

3:13 PM, Nov 4, 2012   |    comments
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Weekly Welt am Sonntag reported Sunday that the ECB is accepting Spanish government bonds as top-tier collateral in return for (EURO)16.6 billion ($21.33 billion) in loans to Spanish banks. The banks are straining under the weight of bad debt from the 2008 collapse of Spain's real estate sector.

The paper, which bases its claims on publicly available documents, says the ECB's own rules mean most of the government bonds should be considered lower-level collateral or not accepted at all.

Major international ratings agencies accord Spanish government bonds only second-tier credit-worthiness.

Officials at the Frankfurt-based bank didn't immediately respond to phone calls and emails requesting comment.

(Copyright 2012 by The Associated Press. All Rights Reserved.)

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