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:
- 1euronews live TV - News | euronews : the latest international news as video on demand
- 2Now is ‘right time’ for Catalonia independence vote, says Mas | euronews, world news
- 3Vatican rocked by another paedophilia scandal | euronews, world news
- 4Two container ships collide on Egypt’s Suez Canal | euronews, no comment
- 5British Muslims’ message to ISIL: Not in my name! | euronews, world news
- 6Sweden becomes first European nation to recognise Palestine | euronews, world news
- 7Algeria: ISIL offshoot releases video threatening French hostage Hervé Gourdel | euronews, world news
- 8Emma Watson threatened with naked photos leak after UN equality speech | euronews, world news
- 9How nasheeds became the soundtrack of jihad | euronews, world news
- 10International tv news | euronews: European and International tv news bulletin
- 11Iceland volcano ‘pollutes Paris’ | euronews, world news
- 12Ebola: Six new suspected cases in Spain | euronews, world news
- 13European Union News | euronews: latest breaking news and headlines about European Union
- 14Learning through “serious games” | euronews, learning world
- 15euronews speaks to Ban Ki-moon ahead of key UN and climate change talks | euronews, the global conversation
- 16Mike Tyson: ‘You learn humbleness when you get older in life’ | euronews, the global conversation
- 17US delivers technical aid to Ukraine but warns over security | euronews, world news
- 18euronews apps : iPhone, iPad, Android, Windows Phone 8, Windows 8, Nokia S40, Nokia Asha, Smart TV and Google Glass
- 19Global warming to ‘cause 250,000 extra deaths a year’ | euronews, world news
- 20Battles rage for Donetsk airport despite Ukraine ceasefire | euronews, world news
Wires > Business
- 07:32 CET Rise in divorce in Iran linked to shift in status of women
- 07:13 CET African rivalries weaken U.N. hand against rebels in Congo
- 06:34 CET Japan to send officials to North Korea for update on abductee…
- 06:32 CET Special Report – Traffickers use abductions, prison ships to feed…
- 05:52 CET North Korea unexpectedly frees American Jeffrey Fowle
- 04:13 CET High chance of cyclone in southern Gulf of Mexico – NHC
- 04:05 CET Japan prosecutors set to rule on possible Fukushima indictments
- 04:03 CET Father of British Islamic State hostage dies – media