Spain’s Bankia asks for 19 billion euros in state aid

Spain’s fourth-biggest bank, Bankia, said Friday it will ask the government for 19 billion euros ($24 billion) in what will be the largest bank bailout in the country’s history.

In a statement, the bank said its board had approved a recapitalisation plan which will allow it “to meet all applicable regulatory requirements and confront a more adverse macroeconomic context”.

“This plan has identified capital needs of 19 billion euros which will be entirely covered by the state,” the bank said, adding it had coordinated the plan with the government and the Bank of Spain.

Under the plan, Bankia’s parent Banco Financiero y de Ahorro (BFA) will ask Spain’s bank restructuring fund FROB to subscribe to a capital increase of 19 billion euros.

Bankia will then launch a 12 billion euro capital increase which will be underwritten by BFA.

The bank, which holds some 10 percent of the country’s bank deposits, was partially nationalised this month as Madrid tried to save it from its vast exposure to the troubled property sector.

The state took a controlling 45-percent stake by converting a loan of 4.465 billion euros to its parent group BFA into equity.

Formed in 2010 from a merger of seven savings banks, Bankia had problematic property assets amounting to 31.8 billion euros ($40 billion) at the end of last year, according to Bank of Spain figures.