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Spain takes over Bankia to steady sector

Thursday, May 10, 2012 - 02:13

May 10 - Hoping to put an end to a four-year banking crisis, Spain's government has effectively taken over Bankia SA, one of the country's biggest banks, after days of market anxiety over the lender's viability. Ciara Sutton reports

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Spain says part-nationalising one of it's biggest banks will help keep the sector "safe". And it's hoping the move will put an end to its four-year banking crisis. It's taken a 45 percent stake in Bankia and says further measures about other banks are imminent. A four and a half billion euro loan is to be converted into state owned shares. There were mixed reactions to the move amongst Bankia customers. (SOUNDBITE) (Spanish), EMILIANO ESCUDERO, SAYING: "I think it's terrible, terrible, terrible. Everything is spontaneous, without thinking things through properly. It's acting from one day to the next. In the morning they said one thing and in the afternoon another. I think it's shameful, almost everything that this government is doing." (SOUNDBITE) (Spanish), PILAR MEJINO, BANKIA CUSTOMER, SAYING: "I don't think it's strange, given the delicacy of the situation, I think the best thing was for them to do this. I personally prefer it to be nationalised than for them to have to give it a load of millions of euros." Bankia is more exposed to the property market than other lenders. It has around 184 billion euros in toxic assets including repossessed housing estates that stand empty. For years analysts have been urging Spain to acknowledge the scale of the banking crisis. There's now concern the rescue could cripple Spain's public finances even though the government is expected to demand banks set aside 35 billion euros against loans to the ailing building sector. Standard Chartered economist Thomas Costerg. (SOUNDBITE) (English) EUROPEAN ECONOMIST AT STANDARD CHARTERED, THOMAS COSTERG, SAYING: "There is still huge uncertainty about Spanish real estate prices, and more importantly private sector appetite is low for those assets, and also for giving more capital to the banking system. There is a big fear that the Spanish government may have to intervene more and may have to support the banking sector by a bigger amount." Bankia shares fell three percent in early Thursday trade - they've fallen 16 percent since reports of a rescue emerged on Monday. Ciara Sutton, Reuters

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Spain takes over Bankia to steady sector

Thursday, May 10, 2012 - 02:13