The Spanish State announced the nationalization of the group Bankia Wednesday. Indeed this bank has too many dubious real credits this is why the government made this decision. The ministry for the Economy announced that the debts of the shareholder of Bankia the BFA towards the State will be transformed into participation.
This debt rises with a little less than 4,500 billion euros. These loans were granted by the FROB with one duration of refunding 5 years and an interest rate of 7,75%. The ministry announced that the FROB will seize the power on Bankia after the procedures were carried out, because it will be in possession of 45% of the capital of the company. The ministry declared that this decision will not have any impact on the shareholders or the customers.
A cleansing of the bank by injection of funds public is envisaged on Monday, May 14. This advertisement made following the resignation of the chairman and managing director of Bankia Rodrigo Rato. Its successor was named Wednesday, it is the old DG of BBVA, Jose Ignacio Goirigolzarri.
The FROB announced this same day as the loans that it granted were transformed into simple actions.
The problem of Bankia is that it is very exposed with the real sector and its decline started in 2008 after the bursting of the real estate bubble. This financing of the banks by the State will be the eighth after this period. It is the Prime Minister Marioano Rajoy who announced Monday that the injections of public funds will not be possible that in the event of major force. It is the strong tension present in the markets which encouraged the State required this financing. The purse of Spain also knew a fall of a little less than 3% before the setting under supervision of Bankia.
The plan of the government to reassure the investors on these risky real credits is to separate them from the assessment of the Bank. New provisions are also envisaged. According to the daily newspaper Cinco Dias, the amount of this reserve could reach more than 30 billion euros.