Spain to Use Bonds to Pump $5.6 Billion of Capital in Bankia
Spain’s bank-rescue fund will inject government bonds, not cash, into Bankia (BKIA) group to recapitalize the lender while it awaits European bailout funds.
FROB, as the country’s bank rescue fund is known, will receive the bonds from the country’s treasury before transferring them to Bankia’s parent, according to an official at the Economy ministry, who asked not to be named in line with government policy. Bankia’s parent will recapitalize its listed unit by extending a subordinated loan, he said.
Spain is bolstering Bankia group after the nationalized lender posted a 4.45 billion-euro ($5.6 billion) first-half loss. Bankia requested in May 19 billion euros in state aid following a 4.5 billion-euro bailout in 2010.
To contact the reporter on this story: Esteban Duarte in Madrid at firstname.lastname@example.org