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Spain part nationalises Bankia

Spain part nationalises Bankia
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Trying to draw a line under a four-year banking crisis, the Spanish government has effectively taken over Bankia, one of the country’s biggest lenders.

The move, which Madrid says should help keep the banking sector “safe”, follows days of market anxiety over Bankia’s viability.

But some customers are not convinced. One of them, Emiliano Escudero, said: “It’s dreadful, dreadful, dreadful. They’re making up policy as they go along, without properly thinking it through, in the morning they say one thing – in the afternoon another. I think it’s shameful, like almost everything that this government is doing.”

For years economists have been urging Spain to acknowledge the scale of the banking crisis, but one problem is no one knows how big the black hole is.

Standard Chartered economist Thomas Costerg said: “There is still huge uncertainty about Spanish real estate prices, and more importantly private sector appetite is low for those assets.There is a big fear that the Spanish government may have to intervene more and may have to support the banking sector by a bigger amount.”

The government has said further measures are imminent involving other banks; more partial nationalisations and bail-outs could have a big impact on Spain’s public finances.