Thursday, May 10, 2012

Spain takes 45% stake in Bankia

(Financial Times) -- Spain has taken a 45 per cent stake in Bankia, the country's third-largest bank by assets, as worries over the financial system sent equity and bond markets falling on Wednesday.

The Bank of Spain said Bankia and BFA, its parent company, had informed it that the conversion of €4.47bn of state aid in the bank into ordinary shares was "the most advisable option for strengthening the [bank's] financial soundness".

As a result of the conversion the Frob, Spain's bank bailout fund, will hold the 45 per cent stake in Bankia.

Spain's ministry of economy said the move was "a necessary first step to ensure its solvency, the tranquility of depositors and dispel doubts about the entity's capital needs". Read More