The Spanish government’s reported plan for rescuing the country’s fourth-largest lender Bankia unsettled the financial markets on Monday.
Sources said Madrid was thinking of raising money to “recapitalise” Bankia using Spanish government bonds, which would then become collateral to borrow more cash from the European Central Bank, thereby directly involving the ECB in sorting out Spain’s banking sector.
Shares in Bankia plunged, the amount of interest that Madrid is having to offer to sell its government bonds jumped and the Spanish people continue to express their anger that they are having to pay to bailout the banks.
The comments of Madrid resident Javier Casas were typical: “I don’t think it’s right that we have to pay for the debts of a private entity whose directors and managers generated the debt. No, I don’t think it’s fair.”
The financial markets are scared the Spanish government – which is already struggling to bring its budget deficit under control – may have to find billions more save other ailing banks.
They are in trouble because the bursting of the Spanish property bubble and the country’s slide into recession means they are awash with worthless investments, loans that are never going to be repaid and repossessed homes.
Prime Minister Mariano Rajoy pinned the blame for rising Spanish borrowing costs not on Bankia, but on concern about the future of the euro zone and again ruled out seeking outside aid to revive a banking sector laid low by a property boom that has long since bust.
“There are major doubts over the euro zone and that makes the risk premium for some countries very high. That’s why it would be a very good idea to deliver a clear message there’s no going back for the euro,” Rajoy told a news conference.
“There will not be any (European) rescue for the Spanish banking system,” Rajoy added, before backing calls for the eurozone bailout fund, which will be in place from July, to be able to lend to banks direct.
Copyright © 2014 euronewsMore about:
- 1Rouble’s drop drives Russian sales surge
- 2Putin upbeat on Russian economy but doesn’t say how or when it will recover
- 3The sanctions story: just starting for Russia, nearly over for Cuba
- 4The American Century comes to an end as China becomes the world’s largest economy
- 5German consumer sentiment hits highest in eight years
- 1Putin upbeat on Russian economy but doesn’t say how or when it will recover
- 2Russian financial crisis threatens as huge interest rate hike fails to help tumbling rouble
- 3Rouble’s drop drives Russian sales surge
- 4New low for Russian rouble as share index plunges
- 5North Sea oil ‘collapse’ warning from explorers’ association
- 1euronews live TV - News | euronews : the latest international news as video on demand
- 2Watch: Passengers ‘push-start’ frozen plane in Siberia | euronews, world news
- 3Le Pen: I admire ‘cool head’ Putin’s resistance to West’s new Cold War | euronews, interview
- 4McCain blasts Europe’s approach to Ukraine conflict ‘a joke’ | euronews, the global conversation
- 5Which countries in Europe cause the most air pollution damage? | euronews, world news
- 6Moldova pro-EU parties take narrow lead in elections | euronews, world news
- 7Grenoble: Europe’s first ad-free city | euronews, world news
- 8NATO joins search for ‘Russian submarine’ off Scottish coast | euronews, world news
- 9European Union News | euronews: latest breaking news and headlines about European Union
- 10Ukraine reports accident at Zaporizhzhya nuclear power plant | euronews, world news
- 11Crude awakening: Romania’s Black Sea oil and gas finds fuel Europe’s energy hopes | euronews, reporter
- 12The American Century comes to an end as China becomes the world’s largest economy | euronews, economy
- 13International breaking news | euronews online world breaking news in video
- 14Belgium’s former queen Fabiola dies at 86 | euronews, world news
- 15Germans demand honour for Turkish woman beaten to death | euronews, world news
- 16Chechen ‘death’ unit fighting with rebels in eastern Ukraine | euronews, world news
- 17Portugal: Ex-PM José Socrates held in corruption probe | euronews, world news
- 18Pakistan Taliban ‘kill over 100’ in Peshawar school attack | euronews, world news
- 19Israeli warplanes hit targets in Syria | euronews, world news
- 20Raids across Turkey target media outlets linked to Erdogan foe Fethullah Gulen | euronews, world news
Wires > Business
- 03:22 CET At U.N. council, U.S. calls life in North Korea ‘living nightmare’
- 03:17 CET South Korea official says cannot rule out North’s hand in hack of…
- 00:37 CET Man rams van into Christmas market in France
- 22:39 CET Record number at Germany’s anti-immigrant rally
- 22:16 CET UBS whistelblower Birkenfeld lodges request for return to Europe
- 21:45 CET Jordan puts Brotherhood politician on trial over UAE comments
- 20:14 CET EU foreign policy boss determined to work with new Tunisian leader
- 20:09 CET Japanese daily promises reform after ‘comfort women’ coverage…