Spain banks
Spanish banks do not need to raid emergency ECB funds again (Reuters)

A European Commission and European Central Bank document claims Spanish banks do not need to tap Europe for more financial aid.

Spain's banks have already siphoned more than €41bn (£35bn, $53bn) from Europe in order to recapitalise the financial sector, after property prices plunged, recession tore through the economy, and the government pursues a stinging austerity programme.

"There is, at present, no reason to foresee further programme disbursements," said the document, which has been shown to Reuters.

Despite this, the document adds that there is still uncertainty over how much of a hit investors must take as banks try to stabilise, as well as potentially painful compensation payments to customers who had been missold financial products in the past.

Spain's house price bubble burst in 2008 at the height of the financial crisis. Property prices have fallen by 35% since then, hurting many banks which had invested heavily in asset-backed securities.

Many of these assets have since been hived off - around €50bn worth - into a bad bank, which needed a capital injection under the European aid package for the Spanish banking system.

The Spanish economy has been in recession since mid-2011 and is not expected to grow again until the first quarter of 2014.

To bring public finances back under control, the government has undertaken a €65bn austerity programme, including cuts to the country's social security budget.

However, the International Monetary Fund (IMF) has praised the government's work in reforming its economy.

"Strong reform progress is helping stabilize the economy and external and fiscal imbalances are correcting rapidly," said the IMF's concluding statement after its visit to Madrid, though it cautioned that "unemployment remains unacceptably high and the outlook difficult".

"This calls for urgent action to generate growth and jobs, both by Spain and Europe."

After taking €1tn from the ECB in emergency funds during the midst of the Eurozone crisis, banks are preparing to start paying back some of the crisis cash.

Around €2bn is expected to be paid back to the ECB by eight banks following the central bank's assurance that interest rates would be held down for an extended period of time, known as "forward guidance". The ECB's key rate is at 0.5%.