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Spain Bank Fund to Inject 4.5 Billion Euros Into Bankia Group

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Sept. 3 (Bloomberg) -- Spain’s bank rescue fund said it would inject immediately 4.5 billion euros ($5.7 billion) into the Bankia group after the lender lost 4.45 billion euros in the first half.

“With this measure, the regulatory capital situation of the group as it completes the restructuring plan is reestablished,” the fund, known as FROB, said in an e-mailed statement today.

Bankia’s request in May for 19 billion euros of state aid to clean up soured assets on its books focused investor concerns about the state of Spanish lenders and helped push the government into seeking a 100 billion-euro bailout for its financial system in June.

Today’s disbursement of aid for Bankia is an advance of the capital injection that FROB will make under the program agreed with Europe and the final amount will be agreed in coming weeks, the rescue fund said. Spanish and European authorities are working closely with Bankia group’s management to finalize the lender’s restructuring plan so it can be approved by the European Commission in November, FROB said.

FROB first said on Aug. 31 that it would inject capital into the Bankia group without specifying an amount. FROB planned to inject from 4 billion euros to 5 billion euros into the group, a person familiar with the situation who asked not to be identified because those details weren’t public, said on Aug. 31.

To contact the reporter on this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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