The president of troubled Spanish bank, Bankia, says he is confident of receiving 19 billion euros ($23.8bn) from the government in the largest bank bailout in the country's history.
Jose Ignacio Goirigolzarri said on Saturday that the bank would emerge as a solid financial entity that would not need further recapitalisation.
Goirigolzarri outlined the bank's restructuring and recapitalisation plans, which foresee beginning the injection of state funds in late June, and said one of his priorities was to "strengthen corporate governance".
At the press conference in Madrid, Goirigolzarri stressed that after the recapitalisation, Bankia would be "solid, efficient and profitable".
He said the main reason the bank sought state help was the loss in market value of its real estate assets.
In a statement issued on Saturday, the partially nationalised bank said a new management team had been tasked with shaping a new strategic plan to transform the bank into a solid financial institution.
The board of directors of troubled Spanish bank Bankia said on Friday it has agreed to ask the government for $23.8bn in state funds.
Goirigolzarri had said on Friday that the recapitalisation would "reinforce the solvency, liquidity and solidity of the bank".
On the same day as credit rating agency Standard & Poor's downgraded Bankia and four other Spanish banks to junk status because of uncertainty over their restructuring and recapitalisation plans.
Trading in Bankia shares was suspended on Friday while its board determined how much new aid was needed.
The bank's shares have been badly affected in recent weeks on fears it could succumb to the massive losses it has built up in in bad loans in the country's collapsed real estate sector.
Bankia requested the suspension of its shares from the Madrid stock exchange ahead of the board meeting to decide on a recapitalisation plan, the bank said in a statement.
Bankia's shares plummeted 7.43 per cent on Thursday to close at $1.96, taking total losses to more than 58 per cent since their listing in July 2011.
On the same day the Spanish government announced an $11bn bailout for the troubled bank.
Bankia was part-nationalised two weeks ago because of its problems with bad property debt.
Any extra government money would be on top of the $5.6bn in state loans that the government converted into shares in the group in the part-nationalisation process.
Jane Foley, senior foreign exchange strategist for the Dutch bank Rabobank, said: "I think that the Spanish banking sector is a very key part of the whole eurozone crisis. And the fear is if the bank isn’t saved, there could be a wider run on those deposits."
"We don’t think the Spanish government has the money," she said.
"This is why the market is concluding that it is very possible at some point of time, the Spanish government may have to concede it needs outside help.
"It would be looking to its eurozone allies and bailout funds to help prop-up those Spanish banks."
Luis de Guindos, the Spanish economy minister, told parliament on Wednesday that the government would provide any capital needed to turn the bank around.
He said the "viability plan" to be drawn up by the board on Friday must specify the capital required to fully meet tougher new banking rules introduced by government reforms in February and May.
There have been four attempts by Spanish governments to shore up the banking system since the global banking crisis of 2008.
Bankia was created in 2010 from the merger of seven struggling regional savings banks.
|< Prev||Next >|
Most Read News
- UN votes to reinstate full Western Sahara mission
- Policemen killed in blast in Gaziantep in Turkey
- Venezuela raises minimum wage as high inflation bites
- Muqtada al-Sadr's supporters storm Iraq's parliament
- Greece removes refugees from Athens due to tourist rush
- Ban boosts appeal of film about Pakistan corruption
|William T. Hathaway|