UPDATE 3-Liquidity freeze problem for Spain-treasury, BBVA

* BBVA’s Gonzalez: structural reforms necessary

* Says financial sector faces “uncertain” future

* Spain says faces no financing problems

(Adds details, quotes)

By Nigel Davies and Carlos Ruano

SANTANDER, Spain, June 14 (BestGrowthStock) – Spain’s treasury
secretary admitted on Monday a liquidity freeze on foreign
markets was biting into some banks, while a banking leader
suggested the problem was even more acute.

“It’s definitely a problem,” Treasury Secretary Carlos Ocana
told a conference of business leaders in response to a question
on difficulties faced by Spanish banks.

“The way to recover confidence is to take decisive and
concrete measures,” Ocana said.

Spain is implementing several major economic programmes at
the same time to save itself from economic stagnation: a
additional 15-billion-euro ($18.29 billion) austerity plan, a
restructuring of the rigid labour market and a consolidation of
its banking sector.

All are seen as key to ensuring a fragile economy pushes
further away from a recession exited in the first quarter that
has left an unemployment rate twice the euro zone average at 20

Spain’s second-largest bank BBVA (BBVA.MC: ) Chairman
Francisco Gonzalez agreed the problems for Spain’s sovereign
debt were hindering the borrowing abilities of the country’s
companies and financial firms.

“If the Spanish state has difficulty in financing itself
outside Spain, then the difficulties will be even greater for
those in the private sector. For the majority of companies and
Spanish financial firms, international capital markets are
closed,” he told the same conference.

Reform programmes have taken on added urgency because of
pressures from bond markets concerned about contagion in the
euro zone after debt-laden Greece had to be bailed out by the
European Union.

However, Ocana denied rumours that Spain was set to call for
financial assistance.

“Spain does not need additional financing from any
international institution. The rumour is false and I deny it,”
he said.

The spread between the Spanish 10-year bono and the
benchmark German bund widened at midday on Monday to 206 from
193 at the beginning of the day after a roller coaster week last

The government sale of a new benchmark 3-year bond on
Thursday was deemed a success with solid demand but at a higher
price, and markets are now looking ahead to a 16.2-billion-euro
redemption due by the end of July.

Ocana said that Spain faced no problem in meeting its debt

“Spain is a country with a low level of debt … in that
sense there are absolutely no problems in meeting its
refinancing needs,” he told reporters after the conference.

“It’s a different thing entirely how markets are playing
with confidence … but there is absolutely no fundamental
reason behind market volatility,” he added.


BBVA’s Gonzalez said Spain should control public spending
and ensure transparency while implementing structural reforms in
pensions, labour, health and education.

“Spain has three urgent tasks, one of which is to ensure its
public finances are sustainable in the medium-long term by
guaranteeing transparency and controlling public spending and
debt,” he said.

The second task is to implement structural reforms in key
sectors to stimulate economic growth, while the third priority
is a restructuring of Spain’s financial system, he said.

Spain’s financial sector is currently undergoing a
wide-ranging consolidation which is due to be completed by the
end of this month.

BBVA’s Gonzalez said the sector is facing a “difficult and
uncertain future.”


(Reporting by Carlos Ruano and Nigel Davies, writing by Sonya
Hepinstall/Nigel Davies; editing by Stephen Nisbet)

UPDATE 3-Liquidity freeze problem for Spain-treasury, BBVA