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Bankia asks Spain for 19B

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User ID: 2051471
05/27/2012 03:07 AM
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Bankia asks Spain for 19B
The board of directors of Spain's troubled bank, Bankia, has asked the Spanish government for 19 billion ($24.5 billion Cdn) in financial support.

Jose Ignacio Goirigolzarri, the bank's president, said late Friday that the bailout would "reinforced the solvency, liquidity and solidity of the bank."

The request came on the same day as credit rating agency Standard & Poor's downgraded Bankia and four other Spanish banks to junk status because of uncertainty over restructuring and recapitalization plans.

Trading in Bankia shares were suspended Friday while its board determined how much new aid was needed.

The bank's shares have been whipped about violently in recent weeks on fears it would not be able to cover the massive losses it has built up in bad loans in the country's collapsed real estate sector.

Concern about the health of Europe's banks is a key constituent of the region's financial crisis. Spanish banks are seen as particularly shaky because they were heavily exposed to the country's collapsed real estate bubble and now hold massive amounts of soured investments, such as defaulted mortgage loans or devalued property.

Bankia has been the worst-hit and holds 32 billion ($41.2 billion) in such toxic assets.

Read complete article - [link to www.cbc.ca]