Spain's Bankia seeks 19 billion euros in state aid

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Spain's Bankia seeks 19 billion euros in state aid

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Spain’s Bankia group asked the government for a 19 billion euro bailout on Friday. The lender was nationalised earlier this month. Madrid now owns a 45 per cent stake.

Bankia is struggling to plug a hole in its balance sheet because it holds some 32 billion euros of bad loans or toxic assets linked to the country’s real estate sector.

Rating agency Standard and Poors cut its credit rating to junk on Friday, citing Spain’s weakening economy.

Trading in the group’s shares were suspended on Friday as executives discussed how much aid the lender needs.

Bankia stock has halved in value since its market debut last July. The bank posted losses of three billion euros in 2011.

Spanish Prime Minister Mariano Rajoy and Socialist opposition leader Alfredo Perez Rubalcaba met late Friday to discuss how to deal with the country’s weak banks.

But the cost of rescuing them could overwhelm government finances. Spain’s public purse is already strained by plunging tax revenues caused by a deep recession and an unemployment rate of nearly 25 percent.