Spanish Prime Minister Mariano Rajoy said he would wait for the results of independent audits of the banking system before talking with Europe about how to recapitalize troubled lenders.

  An International Monetary Fund report due out next Monday is expected to show Spanish banks need at least 40 billion euros ($50 billion), financial sector sources said. 

Without waiting for a widely expected EU rescue, credit ratings agency Fitch cut Spain's sovereign rating to BBB from A with a negative outlook, saying Madrid was especially vulnerable to a worsening of the euro zone debt crisis.

  Fitch estimated Spanish lenders need 50 to 60 billion euros in capital under their updated base case. However, the total fiscal cost to underpin the banks could rise as high as 100 billion euros or 9 percent of gross domestic product in a more extreme scenario similar to Ireland's bank meltdown, it said.

 

Speaking after talks in Berlin with British Prime Minister David Cameron - who called for "urgent action" to tackle the debt crisis - Merkel said Germany stood ready, alongside the other 16 euro zone countries, to do whatever was necessary.