Spain to add another €6 billion to bank bailout fund
THE SPANISH GOVERNMENT will inject another €6 billion into its bank rescue fund to cope with growing problems in its financial sector as it awaits a loan from its 16 partner countries in the eurozone.
An official with the economy ministry, speaking only on condition of anonymity because of government policy, confirmed the extra cash will raise the capital base of the bank rescue fund to €15 billion.
The fund needs the new money to make an emergency cash injection of €4.5 billion into Bankia SA, the nationalised lender, by buying new shares.
Like many of Spain’s banks, Bankia is saddled with huge amounts of soured real estate investments left over from the 2008 property market crash.
Bankia has asked for a total of €19 billion in public aid. The total amount that will be injected into Bankia should be made public in coming weeks after audits of Spain banks are completed, according to the fund for the orderly restructuring of banks, or FROB, the bank rescue fund set up to help Spain’s financial sector.