Spain Injects 4.5 Bn Euros Into Bankia
Spain has made a 4.5-billion-euro ($5.7- billion) non-cash injection into Bankia, a money-losing, state-rescued lender at the heart of the nation's financial crisis.
Madrid moved urgently to shore up Bankia's depleted coffers, delivering the capital as an advance payment on a eurozone banking rescue loan of up to 100 billion euros that was agreed in June.
Bankia shares rose 1.17 percent to 1.389 euros in morning trade Thursday following the news.
The state-backed Fund for Orderly Bank Restructuring (FROB) acted on Wednesday, Bankia and its parent group Banco Financiero de Ahorros said in statements issued the same day.
The FROB made the injection in the form of treasury bills -- short-term government debt securities -- that can be used as collateral for loans from the European Central Bank, an Economy Ministry official said.
In return, the FROB received newly issued shares in the ailing banking group.
After the financial boost, Bankia said it had capital of 4.528 billion euros, indicating that its capital base had declined to just 28 million euros before the FROB came to the rescue.
The FROB acted on the same day that it received a 6.0-billion-euro capital injection from the Treasury, providing the financial firepower for it to help Bankia.
Created in 2010 from a merger of seven troubled regional savings banks, and then listed on the market in July 2011, Bankia's finances exposed serious weakness in the Spanish system.
In the first half of this year Bankia reported a loss of 4.45 billion euros, a dramatic deterioration from its year-earlier net profits of 205 million euros.
In May, the group was nationalised after saying it would need a total 23.5 billion euros to salvage its balance sheet, loaded with risky loans that had turned sour after a 2008 property crash.
Source: Agence France Presse
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