TIMELINE-Spain's banking crisis

Two recessions in three years and the highest unemployment rate amongst developed nations has compounded banks' problems, increasing the likelihood of defaults on mortgage payments and business loans.

Here are some key developments in Spain's long-running bank crisis.

March 2009 - Government takes over mid-sized savings bank CCM, which had a capital shortfall and was heavily exposed to loans to the property sector.

June 2009 - Spain aims to cut the number of unlisted regional savings banks, or cajas, originating from institutions set up hundreds of years ago to help farmers at times of poor harvest.

The state-backed bank restructuring fund, the FROB, is created, giving loans to help the 45 cajas merge with each other and reduce their number to around 15 to eliminate excess capacity in the banking system and make them more efficient.

May 2010 - The FROB takes control of Cajasur, a savings bank run by the Catholic Church, with troubled property loans.

Feb. 2011 - The government demands banks get private capital on board via stock listings or equity investment to reinforce financial safety nets. Many private equity firms come to Spain in following months, but none end up investing.

The FROB is given extra powers and will directly inject cash into those lenders that do not manage to get private funds to raise their capital ratios up to minimum levels. As of June 2012, FROB has spent 15 billion euros to rescue banks without taking into account the biggest problem lender, Bankia.

July 2011 - FROB takes over CAM savings bank, which the head of the central bank later calls the "worst of the worst." The central bank found not only enormous losses at CAM, but the bank's directors awarded themselves multimillion euro severance pay packages that generated public rage.

July 2011 - Bankia, the result of a merger between heavyweight Caja Madrid and six smaller savings banks, lists on the Spanish stock exchange in an operation heavily dependent on retail investors and at a deeply discounted price.

Sep. 2011 - FROB takes over three savings banks -- NovaCaixaGalicia, Catalunya Caixa and Unnim -- valuing the lenders at practically zero.

Nov. 2011 - FROB takes over Banco de Valencia.

February 2012 - The new conservative government forces banks to write off 50 billion euros of losses on repossessed property assets and loans to property developers that have fallen in arrears.

April 25 - Spain's largest banks are sufficiently capitalised to withstand a decline in economic conditions, says the International Monetary Fund, but it pinpoints a group of 10 banks, including Bankia, that are vulnerable.

May 2012 - The government increases provisioning demands on banks, asking them to write off an additional 30 billion euros on performing loans to housebuilders.

May 9 - Spain takes over Bankia by converting a 4.5 billion euro state loan into equity. As of June 8, investors in Bankia, many of them retail customers at the bank, had lost 70 percent of their investment.

May 23 - Spain says the rescue of Bankia will cost at least 9 billion euros.

May 25 - Bankia asks government for 19 billion euro in state rescue, which added to the 4.5 billion euros in convertible bonds, brings the total cost up to 23.5 billion euros.

June 1 - Bank of Spain data shows capital is flying out of Spain --mostly on the wholesale market -- due to fears on the stability of the euro zone's fourth largest economy with 66.2 billion euros of funds leaving the country in March against a surplus for the same month last year.

June 6 - Spain's public prosecutor opens an anti-corruption investigation into Bankia. ($1 = 0.8021 euros)