MADRID, March 30 Spain's Bankia plans
to tell the central bank that it can meet requirements for
provisions against real estate losses without public money or
merging with another entity, a source familiar with the matter
Friday is the deadline for lenders to tell the Bank of Spain
how they plan to cover losses.
Banks also have until May 31 to say if they will need to
merge with other entities under a reform presented two months
ago to clean up the banking sector already hurting from a
"Bankia will present a plan to remain alone and without any
public money," one source said. In total, the bank must find
5.07 billion euros ($6.7 billion) by the end of 2012.
Spanish banks could be hit with a fresh wave of loan
defaults as the economy sinks into recession and the government
may have to find more money or ask Europe for help in filling
the funding gap.
Loan defaults have reached their highest level in 18 years,
moving the focus beyond exposure to the real estate crash to
banks' entire 1.8 trillion euro loan book.
Bankia, the result of a merger between seven regional banks
and considered important enough to the financial system that
could drag down other lenders if it got into trouble, is facing
The bank, which has already received 4.5 billion euros in
public money through an earlier reform, has said it needs to
write down losses of 3.4 billion euros on real estate.
It is already half way to finding the required 5.07 billion
euros, as it has retained earnings from 2011, sold assets and
carried out debt operations, securitisation and exchange of
preference shares for a total value of around 2.4 billion euros
($1 = 0.7532 euros)
(Reporting by Julien Toyer; Editing by Andrew Callus and Helen