Spain – IMF steps up pressure ; some Spanish savings banks to merge; Spain sees yields on 3 & 6-month bills rise $STD

· Spanish banks – some Spanish savings banks to merge - Cajastur, Caja de Extremadura and Caja Cantabria, and Caja de Ahorros de Mediterraneo, on Mon said they agreed to merge some of their operations; pressure is picking up on the group after Cajasur had to be bailed out by the government over the weekend; The government has given the banks a June 30 deadline to merge and consolidate. (Reuters)
· Spanish Banks – Bloomberg reported overnight that at present at least 16 savings banks are engaged in talks or have already sealed plans to merge, citing the Spanish savings bank association. Bloomberg

· Spain – IMF steps up pressure - “Spain’s economy needs far-reaching and comprehensive reforms. The challenges are severe: a dysfunctional labor market, the deflating property
bubble, a large fiscal deficit, heavy private sector and external indebtedness, anemic productivity growth, weak competitiveness, and a banking sector with pockets of weakness. Ambitious fiscal consolidation is underway, recently reinforced and front-loaded. This needs
to be complemented with growth-enhancing structural reforms, building on the progress
made on product markets and the housing sector, especially overhauling the labor market. A
bold pension reform, along the lines proposed by the government, should be quickly adopted.
Consolidation and reform of the banking system needs to be accelerated. Such a
comprehensive strategy would be helped by broad political and social support, and time is of
the essence.” http://blogs.wsj.com/brussels/2010/05/24/imf-pulls-no-punches-on-spain/
· Spain sees yields on 3 & 6-month bills rise - The weighted average yield on 1.06 billion
euros ($1.3 billion) of the 3-month securities was 0.645 percent, compared with 0.515 percent
last month, the Bank of Spain said. The 2 billion euros of 6-month notes yielded 1.264
percent, compared with 0.736 percent. Bloomberg
· Spain's Finance Minister says Investors are Still Worried About EU Debt Despite Aid;
despite the recent EU bailout announcement, there remains a "lack of credibility in the
sustainability of public finances." DJ