Spain gives Bankia urgent cash boost

Spain was forced on the 31 August 2012 to inject emergency liquidity into Bankia after the nationalised lender announced a €4.4bn loss for the first six months of 2012.

Spain’s state bank rescue fund, the Frob, said that it would provide capital to Bankia before the arrival of €100bn in European rescue money requested in June 2012, but which had still not been provided by the EU.

The move came as the government of Mariano Rajoy announced on the 31 August 2012 the fifth attempt at reforming its banking sector in only three years, giving the state the power to close failing lenders and establishing a 'bad bank' as Madrid implements the conditions imposed under the terms of its European bank bailout.

ESO: Background information: Madrid to get power to close troubled banks http://www.europeansources.info/record/madrid-to-get-power-to-close-troubled-banks/

BBC News, 31.8.12: Spain creates 'bad bank' for toxic property assets http://www.bbc.co.uk/news/business-19437308

El País, 31.8.12: Cabinet approves financial reform that tightens controls on lenders http://elpais.com/elpais/2012/08/31/inenglish/1346440515_430515.html

European Commission; RAPID: MEMO/12/637: Statement by Vice-President Rehn on the adoption of Spain's banking decree http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/12/637&format=PDF&aged=0&language=EN&guiLanguage=en

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