FINANCIAL CRISIS

Socialists give Bankia takeover guarded support

PP blames Bank of Spain governor for pushing for 2010 Caja Madrid merger

Opposition suggests budget cuts will be negotiated

The opposition Socialists gave cautionary support Thursday to the nationalization of troubled lender Bankia, which was taken over by the government late Wednesday. Alfredo Pérez Rubalcaba, the Socialist leader, issued a warning to Prime Minister Mariano Rajoy, telling him “to act responsibly” to avoid the bank’s “collapse.”

“The Socialists support the government entering into Bankia but the state will have to pull out at some point. And we need guarantees that there are no losses for the government, and that all the money injected will be recovered, hopefully with profits,” Rubalcaba said.

Meanwhile, Popular Party (PP) officials were blaming the Bank of Spain — specifically its governor Miguel Ángel Fernández Ordóñez — for pressuring Caja Madrid to merge with Bancaja as part of the multi-lender fusion in June 2010 that formed Bankia.

Vicente Martínez Pujalte, the PP spokesman of the economic commission in Congress, said Bank of Spain “obliged” Rodrigo Rato, the former president of Bankia, who resigned on Monday, to merge with Bancaja after showing him financial information “that probably wasn’t correct” and without any plan “to protect assets,” news agency Efe reported.

The Cabinet is expected to pass a reform today aimed at shoring up Spain’s ailing banking sector.

María Dolores de Cospedal, the Popular Party (PP) secretary general and Castilla-La Mancha regional premier, didn’t want to publicly blame anyone for Bankia’s failures, but defended the takeover as the best option for customers and investors.

Banking sources told EL PAÍS that independent experts will set the economic conditions for the government’s takeover, which still has to be approved by Spanish and European financial regulatory bodies, including the percentage stake the state will end up taking in Bankia.

At press time, Socialist leaders were meeting with officials at the Economy Ministry over the matter. Earlier in the day, Rubalcaba insinuated that he would demand the government negotiate its proposed budget cuts in health and education in exchange for the Socialist support of Bankia’s nationalization.

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