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Bankia chief quits as Spain readies bailout

Monday, May 07, 2012 - 01:39

May 8 - Rodrigo Rato has stepped down as chairman of ailing Spanish lender Bankia SA, helping to clear the way for a rescue plan that the government hopes will persuade international investors of the country's financial stability. Ciara Sutton reports

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Spain's ailing banking sector has been in the spotlight for sometime. Now reports say the government is planning to inject billions of euros into it's fourth biggest lender. Rodrigo Rato - a former IMF chief - resigned on Monday as chairman of Bankia clearing the way - say some - for a rescue plan. Spain hopes the move will reassure international investors of the country's financial stability. Sources say the state could inject up to 10 billion euros into Bankia, which is saddled with toxic real estate assets. The move would increase Spain's public debt level this year as the government would have to raise debt to buy Bankia bonds. It's already spent 18 billion euros cleaning up its financial sector, forcing banks to recognise billions of euros of losses. The country's conservative government is also watching France's new anti-austerity one with interest. Frustration over cuts has also been increasing in Spain recently. On the streets of Madrid residents welcomed the prospect of change in Europe. (SOUNDBITE) (Spanish) UNIDENTIFIED MADRID RESIDENT, SAYING: "It is uncertain how this gentleman is going to respond. He has made some interesting promises, but let's see how he fulfils them." (SOUNDBITE) (Spanish) PILAR MADRID RESIDENT, SAYING: "I hope this is the beginning of a real change for everybody. They have to realise that what they have done is useless." There's been no official comment from the Spanish government on Bankia. But earlier this week Prime Minister Mariano Rajoy said a loan to banks from public funds would be "a last resort." Ciara Sutton, Reuters.

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Bankia chief quits as Spain readies bailout

Monday, May 07, 2012 - 01:39