Spain won’t seek international aid, PM insists, as shares plunge at nationalised lender Bankia

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Spain won’t seek international aid, PM insists, as shares plunge at nationalised lender Bankia

May 29th, 2012

FAKE NEWS for the Zionist agenda

Stock market was 2.2% down at close of trading
Stricken bank Bankia has asked for £15billion bailout
Request caused company’s shares to crash by 27%
Bankia clawed back some losses by close of play

By
Hugo Duncan

PUBLISHED:

10:42 EST, 28 May 2012

|

UPDATED:

11:22 EST, 28 May 2012

'There will be no rescue of the Spanish banking sector,' Spain's Prime Minister Mariano Rajoy told a press conference

‘There will be no rescue of the Spanish banking sector,’ Spain’s Prime Minister Mariano Rajoy told a press conference

The financial hurricane buffeting Europe intensified tonight as Spain plunged deeper into crisis.

Spanish Prime Minister Mariano Rajoy admitted the situation was ‘extremely difficult’ as concerns over the country’s fragile banks spooked the markets.

Shares in stricken lender Bankia crashed 27 per cent in early trading in Madrid after it requested a £15 billion state bailout. It clawed back some of its losses later in the day.

By the end of trading, the Spanish stock market had fallen 2.2 per cent to its lowest level for nine years as banking heavyweights including Santander – which has a vast operation in Britain – followed Bankia down.

Borrowing costs in Spain soared back into the danger zone amid worries over whether the country can afford to rescue the banking system.

The 10-year bond yield – the interest the government pays to borrow – jumped to 6.5 per cent as investors demanded higher rates of return.

That was the highest since November last year and close to the 7 per cent level that triggered bailouts in Greece, Ireland and Portugal.

By contrast, the safe-haven German bond yield was 1.38 per cent while in Britain it was just 1.77 per cent, keeping a lid on interest payments owed by the UK.

The gap between the Spanish and German yields – a key measure of the risk attached to holding Spanish debt – was the widest in the 13-year history of the euro.

Mr Rajoy pinned the blame on concern about the future of the eurozone rather than the parlous state of the country’s finances.

‘There are major doubts over the eurozone and that makes the risk premium for some countries very high,’ he said.

Stricken: Spain's fourth largest bank Bankia needs 19 billion euros in state aid to shore itself up against its bad loans

Stricken: Spain’s fourth largest bank Bankia needs 19 billion euros in state aid to shore itself up against its bad loans

‘That’s why it would be a very good idea to deliver a clear message there’s no going back for the euro.’

But analysts continue to doubt that Spain has done enough to prop up the country’s troubled banks, which lent heavily during the property boom but are now sitting on nearly £150 billion of toxic loans following the crash.

The recession has pushed unemployment in Spain up to nearly 25 per cent – the highest in Europe – while more than half of 16 to 24-year-olds are out of work.

At a briefing earlier today, Mr Rajoy insisted that the country’s finance sector will not need an international rescue amid ongoing economic upheaval in the eurozone.

‘There will be no rescue of the Spanish banking sector,’ he told a press conference.

However, he said the government had no choice but to bail out troubled lender Bankia, which has been crippled by Spain’s real estate collapse.

‘We took the bull by the horns because the alternative was collapse,’ said Rajoy, stressing that Bankia clients’ savings were now safer than ever.

Among the chief concerns surrounding Bankia’s request for a bailout is just how Spain plans to fund it.

Bankia S.A., a fusion of seven savings banks, was one of the institutions hardest hit by Spain’s real estate collapse over the past four years, and is estimated to have €32 billion in toxic assets.

It was effectively nationalised earlier this month when the Spanish government converted €4.5 billion in rescue funds it committed last June into shares.

The sheer size of the bailout figure unveiled on Friday came as a shock to many, and opposition political parties are demanding the government explain how the bank got into such a state.

Bank of Spain estimates show the country’s banks are sitting on some €180 billion ($233 billion) in assets that could cause them losses.

Spain’s finances are already under severe strain as it battles a second recession in three years, and an unemployment rate of nearly 25 per cent.

The country has long denied it will follow Greece, Ireland and Portugal and seek international help, but Mr Rajoy’s government has called on the European Central Bank to do more to alleviate its exorbitantly high borrowing costs.

Spain’s rocky financial situation has been exacerbated by overspending in its semiautonomous regions.

One of the regional governments, Catalonia, called for financial assistance last week, claiming it was running out of options to refinance its debts.

Asked about the fragile finances of some regions, Mr Rajoy said: ‘We are not going to let any region or financial entity fall because otherwise the country would fall.’

As fears grow for Spain, analysts predicting doom for Greece have expressed confidence that the country will leave the eurozone on June 18.

Nick Dewhirst, director at wealth management firm Integral Asset Management, told CNBC.com that if an anti-austerity party wins the country’s elections on June 17, Greece will exit the single currency promptly.

He added: ‘The eurozone is a club, but you get cheaters who get away with it until everyone finds out – and at that point you need to remove them otherwise everyone will cheat. It’s better for Greece to leave.’

Despite speaking of a Greek exit as almost inevitable, Mr Dewhirst said it was possible for withdrawal to be orderly.

‘It’s a bit like Y2K,’ he said. ‘There would be a lot less to it then everyone thinks.’