Requesting Rescue: Bankia asks for €19 billion bailout

Spanish banks are at the heart of market fears that Spain could be forced to seek an international financial bailout.

MADRID: Spain’s fourth-biggest bank, Bankia, has asked the government for €19 billion ($24 billion) in what will be the largest bank bailout in the country’s history. In a statement, the bank said that its board had approved a recapitalisation plan which will allow it “to meet all applicable regulatory requirements and confront a more adverse macroeconomic context”. Bankia, which holds some 10% of the country’s bank deposits, was partially nationalised this month as Madrid tried to save it from its vast exposure to the troubled property sector. The new bailout package will bring the total amount of the government’s rescue funding to €23.5 billion for the bank, which was formed in 2010 from a merger of seven troubled regional savings banks. Spanish banks are at the heart of market fears that Spain itself could be forced to seek an international financial bailout. Standard & Poor downgraded Bankia to BB+, one notch into junk status.

Published in The Express Tribune, May 27^th, 2012.