Spain says US backs bank aid plan Spain says that the US has backed its call for international aid for troubled banks, avoiding direct intervention into state finances, as Madrid scrambles to find allies in the face of continued German opposition to its plans. Soraya Sáenz de Santamaria, Spain's deputy prime minister, said following a meeting with Tim Geithner, US Treasury secretary that both countries were now "working in the same direction." IN Europe The US and Spain agreed that European banks should be able to "go directly to obtain funds without any state intervention, without any conditionality," Ms Santamaria said. The Treasury department said that Mr Geithner and Ms Santamaria had discussed "the significant progress that Spain has made on fiscal and structural reforms, the Spanish government's plans to strengthen its financial sector and support recovery and job creation, and the broader challenges facing Europe and the global economy." The Spanish deputy prime minister's journey to Washington, where she also met Christine Lagarde, managing director of the International Monetary Fund, came as Spain's borrowing costs rose amid uncertainty over the €19bn rescue of Bankia, the country's third-biggest bank by assets. Madrid has insisted it will not need an international rescue, with the government in complete opposition to any form of externally imposed programme as seen in Greece, Portugal and Ireland. Luis de Guindos, Spain's finance minister, travelled to Germany earlier this week to meet his counterpart, but received no compromise from Berlin on its opposition to European funds being injected directly into troubled banks. "I don't know if we are on the edge of a precipice, but we are in a very, very difficult situation," Mr De Guindos said at a conference on Thursday night. Some Spanish commentators say a bailout for Spain is now inevitable, although the centre-right government hopes it can secure European funds to recapitalise its banks and finance the state without a reform package imposed by the "troika" - the European Commission, the European Central Bank and the International Monetary Fund. "A rescue is inevitable," said Lorenzo Bernaldo de Quirós, a Madrid-based consultant and economic analyst. The Spanish economy without foreign assistance cannot meet its debts. The question is whether the aid involves intervention and the imposition of the troika. The IMF on Thursday said that there had been no discussion of financial aid with Spain during the meeting with Ms Santamaria. Although the idea of using the European Stability Mechanism (ESM), the eurozone's €500bn rescue fund, to recapitalise banks directly has gained powerful supporters in the EU - including José Manuel Barroso, president of the European Commission, and Mario Draghi, head of the European Central Bank - such a move is still being blocked by Germany, which has insisted such loans go through the national governments. Part of Germany's concern is that by directly lending to banks, it would be impossible to apply the kind of conditions currently attached to bailout loans, and even the idea's strongest advocates acknowledge it would take a change in the ESM treaty to allow the fund to change its procedures. Senior EU officials have said they are unwilling to go through another draft of the ESM treaty at this late date. They had hoped to have the fund up and running by July 1, but delays in ratifications have already put that date into question. Reopening the question of bank recapitalisations would almost certainly delay the ESM's introduction even further. Several senior officials believe Spain will eventually be forced into a programme where ESM loans are paid directly to Madrid, which then uses the money to recapitalise its banks. That could occur shortly after the ESM goes into effect this summer. Such a programme would likely not force Spain to change its current policies. Senior officials say Madrid's tough austerity measures are already putting the country on the right track. Still, an ESM programme would likely come with the same kind of intensive monitoring by EU and IMF officials as the current Greek, Irish and Portuguese bailouts, which include quarterly visits by a high-profile "troika" team of international lenders to evaluate the recipients" progress.