Spain′s Bankia looks for billions in state aid | Business| Economy and finance news from a German perspective | DW | 25.05.2012
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Spain's Bankia looks for billions in state aid

Spain's fourth-biggest lender, Bankia, sees trading in its shares suspended on the Madrid stock exchange. The move came ahead of an expected announcement that the bank would need billions from the state to survive.

Trading in shares in the troubled Spanish lender, Bankia, was suspended in Madrid on Friday as the bank's new management prepared to present a restructuring plan to the government. The bank was expected to ask for at least 15 billion euros ($19 billion) in state funds to put its financing back on a solid footing.

"Trading in Bankia shares was suspended over circumstances that could affect trading," said a laconic note from the stock market regulator CNMV.

Spain's El Pais newspaper reported Bankia might need as much as 20 billion euros to wriggle out of its current plight. The new estimate came just one day after Economy Minister Luis de Guindos said he reckoned with a 9 billion euro bailout request.

Bankia already received 4.5 billion euros in 2010 from a central restructuring fund. The state took a 45-percent stake in the bank, which has been struggling with a huge pile of toxic real estate assets.

Wider implications

Commenting on Bankia's expected bailout request, analysts in Spain argued a big figure in called-for funds might be the better option for the bank.

"The idea is that the 15 billion euros or so would cover all current funding needs and any more that might pop up, reassuring the market that there won't be any more surprise announcement in the future," Sonia Tardio from Madrid's Renta4 brokerage said in a statement.

Bankia and other lenders exposed to the property bust are seen as a major risk for the entire eurozone because of concerns that their governments will end up having to ask for international aid to prop up banks.

State funds to rescue ailing banks are a sensitive subject in Spain where the government has been asking citizens to tighten their belts and has been slashing spending on education and the national health system.

hg/sms (dpa, Reuters)