November 25, 2012 / 1:00 PM / in 5 years

Spain to get EU bank aid Dec. 15 in return for job losses-report

MADRID, Nov 25 (Reuters) - European authorities will transfer 35 billion euros to Spain’s state bank rescue fund on Dec. 15 in exchange for massive layoffs at Spain’s four nationalised banks, including state-rescued Bankia, El Pais newspaper reported on Sunday.

The cash injection from European bailout funds will be disbursed to troubled Spanish banks two weeks after it is paid into Spain’s bank restructuring fund, or FROB, the paper said.

Bankia, which sought a 23.5 billion euro bailout from the state in May, is expected to be forced to lay off up to 6,000 people from its current 20,000 staff, while NovaGalicia Bank is seen laying off 2,000 of its 5,800 workforce, said El Pais, citing European and banking sources.

Bankia and NovaGalicia Bank declined to comment on the report, which also said the banks would have to close 1,000 branches between the two of them.

Catalunya Caixa (CX) and Banco de Valencia, the other two nationalised lenders, are currently being sold off, and conditions would be imposed on the buyers, the paper said.

Spain’s economy ministry also declined to comment on the date the aid could be disbursed to the state rescue fund, or the exact amounts the lenders would finally need.

The payment will be the first since the Spanish government was granted up to 100 billion euros of aid in June, in a European bail-out of the banking sector. It needs the money to clean up the balance sheet of financial institutions hit by the burst of a real estate bubble five years ago, which left them loaded with 184 billion euros in toxic property assets.

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