MercoPress. South Atlantic News Agency
Spain takes over fourth largest bank to try and calm markets
The survival of the Euro could be at stake if PM Rajoy is not convincing Spain took over Bankia, the country's fourth biggest lender, on Wednesday, trying to dispel concerns over the government's ability to clean up the financial sector four years after the banks were hit by a property market crash.
In a deal that will give the state a 45% indirect stake in Bankia, the government will take control of its parent company BFA by converting into equity a 4.5 billion Euro loan it had given the financial group previously, the central bank said.
The economy ministry pledged to do all it takes to clean up Bankia, which has more than 30 billion Euros of exposure to troubled loans to property developers and repossessed land and buildings.
The government is expected to lend or give Bankia up to 10 billion Euros in additional aid, though some bank analysts say it will need more.
Uncertainty over the final cost of the country's banking reform hit the Euro, Spanish debt and global stock markets on Wednesday.
If a huge rescue puts Spain's fiscal solvency into question and the country needs international aid, the survival of the Euro zone could be at stake.
Since the banking crisis began, Spain has bailed out seven smaller savings banks, but the Bankia rescue is by far the biggest and it comes after a string of other banking reform plans revealed over the past week.
These include moving toxic assets out of some banks and demanding that banks set aside 35 billion Euros against loans to the moribund building sector, on top of 54 billion Euros the banks are already provisioning.
“We will deepen the process of cleaning up the banks,” Prime Minister Mariano Rajoy told a news conference. Rajoy had promised not to use state funds to rescue the banks, but mounting doubts over Bankia had shaken the Euro zone and he did a U-turn.
Rajoy's latest moves are the fourth banking sector overhaul in three years, but investors have yet to be convinced.
Top Comments
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Read all commentsSpain NATIONALIZES No. 4 bank :-))))
May 10th, 2012 - 05:43 am 0Where are all those Brit fools criticizing and trying to lecture Argentina :-)))
Very soon those same fools will ask Argentina to take the Malvinas back ...on their knees!
09 May 2012
“Riots were a 'taste of Britain to come', warns Government adviser”
http://www.telegraph.co.uk/journalists/rowena-mason/9255627/Riots-were-a-taste-of-Britain-to-come-warns-Government-adviser.html#comment-524734111
A bank is far different to National media
May 10th, 2012 - 06:30 am 0Bank to stabilize economy, British Did the same when RBS nearly collapsed
Media to ??? produce more government propaganda
Seems poor old Marcos has got his little brain confused (again)....
May 10th, 2012 - 07:14 am 0The poor lad can't tell the difference between theft (YPF) and a bank asking to be nationalised to save itself.
You can't blame him for getting confused, when you have the intellectual skills that equal that of a piece of burnt toast you'll understand him getting confused.
I did find it amusing he then randomly states the UK would do something it hasn't done for over 200 years and then posts a another completely random link to a newspaper.
On another note, it continues to amaze me the number of Argentine's taking pleasure in Spain's problems. This is a country that has supported Argentina when nobody else would in Europe and is also your mother country and this is the way you repay them?
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