Arab Today, arab today spain injects non cash €45bn into bankia
Last Updated : GMT 18:20:30
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Spain injects non cash €4.5bn into Bankia

Arab Today, arab today

Arab Today, arab today Spain injects non cash €4.5bn into Bankia

Madrid - Arabstoday

Spain has made a €4.5bn ($5.7-bn) 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 €100bn that was agreed in June. 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 €4.528bn, indicating that its capital base had declined to just 28mn euros before the FROB came to the rescue. The FROB acted on the same day that it received a €6bn 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. Spain’s government yesterday said the regions, whose red ink-strewn accounts have alarmed world markets, are “on track” to meet their deficit-cutting target this year. The 17 powerful regions posted an average public deficit equal to 0.77% of gross domestic product in the first half of 2012, Budget Minister Cristobal Montoro said. “The regions are on track to meeting the public deficit agreed by all of them,” Montoro told a news conference. The regional governments have promised to cut the deficit—the gap between income and spending—to 1.5% of total economic output by the end of this year. “So, it is a positive conclusion that also serves to put things right in relation to what is being said so freely and falsely about regional government accounts being out of control,” Montoro said. From gulf times.

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