[credit provider=”Wikimedia Commons” url=”http://commons.wikimedia.org/wiki/File:Timo_Soini.jpg”]
True Finn chief Timo Soini is calling for changes to the Portuguese bailout before it is passed, according to Reuters.Those changes should include a bailout package that hits banks, forcing them to recapitalize, and bear the burden of the bailout through loan losses, according to Soini.
This wouldn’t just effect Portuguese banks however, as Spanish banks have significant exposure to the country.
His comments come just hours after the current Finnish Prime Minister admitted he would be unable to pass to Portuguese bailout, as is, before leaving office.
Finland holds the keys on the Portuguese bailout, as it requires parliamentary support to pass. While there is no guarantee the True Finns actually end up forming a government with other parliamentary parties, it now seems likely.
If the True Finns, aligned with other parties, reject the current terms of the bailout, we could see haircuts enforced on Portuguese bondholders rather than a clean bailout like we saw in Greece and Ireland.
Finland’s opposition could lead to the growth of similar sentiment around the European Union.