Spain will decide how to fill an €80 billion hole in the country’s bank finances within two weeks, Finance Minister Luis De Guindos said yesterday.

The EU yesterday unveiled new plans for winding up failing banks

In Brussels for talks, De Guindos said Madrid “will take decisions on recapitalisation within approximately 15 days.”

Worries were mounting over Spain’s finances, with Madrid needing help to find €80 billion for bank recapitalisations in the midst of a deep recession brought on by the bursting of a property bubble.

“The Spanish bank problem is limited to certain entities which have already been treated and brought under check by the government,” the Finance Minister said.

He said there were no discussions with eurozone partners about their furnishing aid to the Spanish banks, a day after Spain’s King Juan Carlos asked Europe for “solidarity.”

The International Monetary Fund will report on the state of Spain’s banks on Monday, with separate studies by outside consultants including the world’s biggest firms of auditors also due over the following week and months.

Amadeu Altafaj, spokesman for European Economic Affairs Commissioner, said discussions between the European Commission and Madrid on specific actions would follow “only after that.”

“There is a clearly-defined roadmap for the financial sector in Europe,” De Guindos added.

He echoed Prime Minister Mariano Rajoy’s remarks to Spain’s Parliament on Tuesday, saying there was “no other option but to move towards greater banking integration,” a so-called eurozone banking union.

On Saturday, Rajoy said Spain was willing to give up some budgetary sovereignty to achieve this goal.

Spain wants the EU to allow the European Stability Mechanism (ESM) bailout fund – due to come into force in the coming weeks – to recapitalise its banks directly after a property boom went bust and deep recession set in.

Germany reiterated yesterday that only governments can apply for cash from the European bailout funds to recapitalise banks and that lenders cannot directly seek aid.

Markets increasingly expect Spain to need an international lifeline because it cannot raise the huge sums required to rescue its bad loan-ridden financial sector.

Spain faces soaring borrowing rates on bond markets, which are wary of the cost of bailing out banks and pessimistic about the state’s struggle to rein in public deficits at a time of recession and high unemployment. Meanwhile Irish Prime Minister Enda Kenny yesterday wrote to his fellow EU leaders urging a political resolution of the bloc’s banking crisis, he told Parliament.

He told lawmakers he expected the bank problems would be a central issue on the agenda of the summit of European Union leaders on June 28-29.

“It might become necessary to have some serious reflections on this before the end of June,” he said.

Kenny said the eurozone banking problem needed to be dealt with politically. “From that perspective I am writing to all of the leaders today,” Kenny said.

As urgency mounts over Spain’s finances, the EU yesterday unveiled new plans for winding up failing banks – a first step towards a controversial eurozone “banking union”.

The European Central Bank, the International Monetary Fund (IMF) and the European Commission insist the eurozone must establish such a union as a path towards deeper fiscal and political integration.

Ireland was forced 18 months ago to seek an €85 billion bailout from the EU and the IMF after its economy came close to collapse, in large part caused by its efforts to keep its banks afloat after massive losses.

In a referendum last week, Irish voters came out 60 per cent in favour of the EU’s fiscal treaty, which is designed to shore up the turmoil-hit eurozone by penalising countries that fail to keep their deficits in check.

Kenny said that in phone calls to a number of European leaders since, he made clear the need for a resolution of the banking crisis.

“This is a tortuous and complex process and there are no simple quick-fix solutions,” Kenny said.

He welcomed the debate in Europe about the separation of sovereign debt and bank debt. “This is the start of a strategy that I hope will bring a political conclusion to this,” Kenny said.