WASHINGTON, June 9 (UPI) -- Banks in Spain require an additional $46 billion to survive an economic downturn, the International Monetary Fund said.
The number is just the start, but will likely be considered a solid, credible start by leaders in Europe as they formulate a plan to rescue Spain's financial sector, which is reeling from huge losses in the housing market, The New York Times reported Saturday.
Housing market losses hit first. After that, the economic downturn, which is pulling much of Europe down in a double-dip recession, threatened Spain's financial institutions.
The IMF's aid estimate was based on the Spanish economy contracting by 4.1 percent in 2012 and 1.6 percent in 2013.
The audit said Spain's banking system "appears resilient to further shocks," but it also said rescuing banks required a fast and final solution to reinstate investor confidence.
"In recent years a gradual approach to taking corrective action allowed weak banks to continue to operate to the detriment of financial stability," the report said.
President Barack Obama at a Friday news conference urged "taking clear action as soon as possible to inject capital into weak banks."
In New York, IMF Managing Director Christine Lagarde said the recent financial crisis in Europe is "now threatening the very existence of the European project," referring to the currency region of 17 countries that use the euro.
In May, Spain nationalized its largest mortgage firm Bankia, but has yet to formally ask for help from the international community. While that step is expected soon, the government said it would wait for the IMF report and two private audits before requesting a bank bailout.