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Spain to bolster bank rescue fund
Source: Agencies |
September 5, 2012, Wednesday
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Print Edition
THE Spanish government will inject another 6 billion euros (US$7.5 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 euros.
The fund needs the new money to make an emergency cash injection of 4.5 billion euros into Bankia SA, the nationalized 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 euros 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.
Spain could finance the fresh injection of cash into the rescue fund by issuing bonds, but no decision has been made yet, the official said.
To manage the rising cost of helping its banks, Spain has formally asked for a loan from other eurozone countries of up to 100 billion euros. The government expects to get the loan by early November, once the banks' restructuring plans are unveiled this month.
Meanwhile, the economy is in a deep recession.
The government said yesterday that the number of people claiming unemployment benefits rose by 38,179 in August from the previous month to a total of 4,625,634.
Employment Ministry spokeswoman Engracia Hidalgo said although the monthly rise in unemployment was bad news, the increase was the smallest since August 2006.
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 euros.
The fund needs the new money to make an emergency cash injection of 4.5 billion euros into Bankia SA, the nationalized 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 euros 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.
Spain could finance the fresh injection of cash into the rescue fund by issuing bonds, but no decision has been made yet, the official said.
To manage the rising cost of helping its banks, Spain has formally asked for a loan from other eurozone countries of up to 100 billion euros. The government expects to get the loan by early November, once the banks' restructuring plans are unveiled this month.
Meanwhile, the economy is in a deep recession.
The government said yesterday that the number of people claiming unemployment benefits rose by 38,179 in August from the previous month to a total of 4,625,634.
Employment Ministry spokeswoman Engracia Hidalgo said although the monthly rise in unemployment was bad news, the increase was the smallest since August 2006.
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