Spain bails out 3rd largest bank

Discussion in 'Economics' started by Grandluxe, May 8, 2012.

  1. Spain to spend billions on bank rescue

    By Miles Johnson,
    May 8, 2012 -- Updated 0024 GMT (0824 HKT)

    (Financial Times) -- Spain is planning a state bail-out of Bankia, the country's third biggest bank by assets, in a move likely to involve the injection of billions of euros of public money into the troubled lender.

    In an abrupt reversal of policy, the Spanish government, which had previously insisted that no additional state money would be needed to clean up the country's banking sector, confirmed that an intervention was being prepared.

    One adviser to Spanish banks and government agencies said that if the amount Madrid injected into Bankia was not sufficient, and did not involve a much improved management of its bad assets, then the plan risked achieving little.

    "Just injecting capital would be the equivalent of rearranging the deck chairs on the Titanic," the person said. "I think Spain has not admitted to itself just how weak some of its banks actually are and how serious the situation is."