Bankia says the planned government bailout will be enough to turn the bank around. If appproved, it would be the largest-ever bank bailout in Spain, at 19 billion euros ($24 billion).
Troubled Spanish lender Bankia is confident it will receive 19 billion euros in bailout funds from the government, bank president Jose Ignacio Goirigolzarri, told reporters on Saturday, adding that the money would probably arrive sometime in July.
He said after the recapitalization Bankia would be "solid, efficient and profitable."
Goirigolzarri blamed the massive loss on the economic crisis which has hurt Spain's property market, forcing it to collapse in 2008 after a decade-long boom. As a result, the value of Bankia's real estate assets dropped dramatically, leading to Bankia's need for state funds.
More money than expected
On Friday, the Spanish bank Bankia confirmed that it is seeking a further 19 billion euros in state aid as part of its restructuring plan. It comes in addition to the 4.5 billion euros that Madrid has already pumped into the lender and would make it the biggest ever bailout of a Spanish bank.
The sum requested is significantly larger than the 15 billion the bank had widely been expected to ask for.
Amid the speculation about just how deep the Spanish government would be asked to dig to bail out the country's fourth-largest bank, the Madrid stock market had suspended trading in Bankia's shares earlier in the day on Friday.
The price of its shares had plummeted by more than seven percent during Thursday's session. Bankia's shares have lost 58 percent of their value since they were listed in July 2011. The bank was created through the merger of seven struggling regional lenders in 2010.
Bankia received a further blow on Friday when ratings agency Standard & Poor's lowered its credit rating, along with those of five other Spanish lenders to junk level, from BB+ to BBB-.
"The rating actions follow our review of the wider implications for economic and industry risks in the Spanish banking sector after our two-notch downgrade of the Kingdom of Spain," the statement said, referring to its reduction of its rating of Spanish sovereign debt last month.
pfd, ng/slk (dpa, AFP)