Luis de Guindos told the Spanish parliament that the government would do whatever was needed to rescue Bankia, while stressing that the situation “shouldn’t be extrapolated to the nation’s entire banking system”.
In what amounted to an attempt to bolster confidence and prevent a run on Spanish banks, he said directors at the nationalised lender would present a plan indicating the level of capital needed to meet all regulatory requirements.
Announcing the taxpayer bailout after markets had closed, Mr de Guindos said: “The government will fully back the capital needs which result from this plan.”
He said €9bn would cover capital needs of €7.1bn to comply with two banking reforms presented by the government as well as €1.9bn of capital buffers to comply with European-wide rules.
Bankia is the country’s fourth-largest lender and was formed in 2010 by merging seven of Spain’s regional savings banks. It has the greatest exposure to toxic property assets.
The Spanish government had already been forced to part-nationalise the lender earlier this month and reports last week that customers had pulled €1bn out of the bank triggered a 30pc fall in shares.
Mr de Guindos said a total restructuring of the bank would occur after a thorough assessment and that the government would seek to sell Bankia once it has been cleaned up, as part of a strategy to restore investor confidence in the country’s banking sector.
The minister sought to ease concerns as fears about the health of the Spanish banking system have mounted in recent weeks because of their exposure to the collapsed property market. Spanish banks have an estimated €184bn of what the Bank of Spain describes “problematic” real estate-linked assets.
A week ago Moody’s slashed the ratings of 16 Spanish banks, citing the reduced ability of the Spanish government to provide support to the sector, as well as the “adverse operating conditions” created by a renewed recession.
The ratings agency also downgraded Santander UK, although it noted it has “no direct exposure to the Spanish government (or regional governments)”.
Spain has appointed consultancies Oliver Wyman and Roland Berger to carry out a stress test on the nation’s lenders, the results of which are to be published in the second half of June.
“The question is now about the long-term solvency of parts of Spain’s banking system, especially what is going to happen with mortgage loan default. This concern is not being addressed,” said Martin van Vliet, senior economist at ING.
The Telegraph
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