Spanish bank chairman steps down

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Spanish bank chairman steps down

Spanish bank chairman steps down
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The chairman of Spain’s Bankia, Rodrigo Rato, announced his resignation on Monday. The Spanish government is on the verge of announcing a rescue plan for the troubled bank which will be part of a wider reform of the banking sector in Spain.

It is thought Bankia could need an injection of around 10 billion euros although this is unconfirmed. Its shares fell 3.3 percent on the news on Monday.

Bankia came into being as a result of the merging of several savings banks, or “cajas” as they are called in Spain.

They all suffered huge losses due to the collapse of the property sector.

As Rato quitPrime Minister Mariano Rajoy opened the door to using public funds for helping troubled banks.

“If it were necessary to get the credit to save the Spanish financial system I would not hold back from doing what other European Union countries have done – loan them public money – but it would only be as a last resort,” Rajoy said in a radio interview on Monday.

Bankia chief Rato, who is also a former minister for the ruling centre-right People’s Party (PP), was asked to stand down so that the rescue would not seem like a PP favour for a political ally, one of the sources said.

Rato said in a statement he would hand over to Jose Ignacio Goirigolzarri, a former chief executive of major Spanish bank BBVA.

Two government sources said state money would be injected into Bankia – an agglomeration of local savings banks or “cajas” – through the purchase of bonds known as CoCos, or contingent convertibles, that can be converted into shares.