MADRID (Reuters) - Spanish lender Bankia (BKIA.MC) will ask the state for more than 15 billion euros (US$19 billion) to bail it out when its new management team presents a restructuring plan on Friday, a financial sector source said late on Thursday.
Bankia, partially nationalized by the government earlier this month, is the weak spot in Spain’s fragile banking system where loan losses stemming from a 2008 property crash threaten to push the country into seeking international assistance.
“The help needed to clean up the bank will be more than 15 billion euros,” said the source, who spoke on condition of anonymity.
Neither Bankia, the country’s fourth-largest bank with 10 percent of Spaniards’ deposits, nor the government would comment on the matter on Thursday.
The government said on Wednesday that it would provide any capital outlined in the new management’s recapitalization plan through the state-backed restructuring fund, the FROB.
Economy Minister Luis de Guindos told a congressional committee that the state would have to put at least 9 billion euros into saving Bankia to cover the writedown of losses on real estate assets like soured loans to property developers and repossessed housing.
The 15 billion euros would come on top of the 4.5 billion euros in state loans that the government converted into equity in Bankia’s parent company BFA as part of the state takeover, giving the government a majority stake in the lender. ($1 = 0.7948 euros)
Reporting By Carlos Ruano, Writing by Sonya Dowsett