Germany to ease Spanish businesses financing woes | Business| Economy and finance news from a German perspective | DW | 03.06.2013
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Germany to ease Spanish businesses financing woes

Germany is planning to set up a credit facility for small and medium-sized firms in Spain under efforts to drive down their financing costs. Germany is awash with cheap money due to its top-notch credit ratings.

Germany's state-owned KfW bank was charged with setting up a bilateral loan program with its Spanish counterpart ICO, aimed at providing low-interest loans worth about 1 billion euros ($1.3 billion), a German Finance Ministry document said.

The document, which was obtained by AP news agency on Monday, said KfW would be granting ICO 800 million euros in a ten-year loan coming at a total liability, including interest, of 1 billion euros. In addition, it added, KfW was currently in talks to support two existing ICO company lending programs with another 100 million euros.

The credit facility needed to come rapidly to solve the Spanish companies' acute financing problems, enabling small and medium-sized firms with solid business models to secure their existence and create new jobs, AP quoted from the document.

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Businesses in debt-laden countries such as Spain are suffering from a lack of access to credit as the country's economy is mired in recession. Even when banks are willing to lend, the interest rates demanded are much higher than in Germany.

By contrast, Germany can borrow money at extremely low interest rates as it enjoys top-notch credit ratings.

The document signed by Deputy Finance Minster Steffen Kampeter indicated that KfW business financing could also be extended to other heavily-indebted eurozone countries such as Portugal.

Meanwhile, Spain's international lenders have praised the country for getting its ailing banking sector back into shape. Experts from the European Commission, the European Central Bank (ECB) and the International Monetary fund (IMF) said Monday that Spanish banks would enjoy better solvency and liquidity.

Last year, the so-called troika of international lenders granted Spain bailout loans totaling 100 billion euros to help shore up the country's banking sector struggling under bad loans from the collapse of the property market in 2008.

uhe/rc (AP, dpa)

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