Bankia closes up 24% ahead of imminent bailout
European bailout funds already "at Spains disposal"
Spanish lender Bankia, which is due this week or the next to receive a European rescue package, closed up 24 percent on Wednesday, the highest rise since it debuted on the Spanish bourse in 2011.
The gains are explained by the imminent release of the funds, designed to shore up the troubled lender, which was partly nationalized in May due to its huge exposure to Spain's real estate market.
Bankia is expected to receive 30 billion euros from the European Financial Stability Facility to clean up its balance sheet. The government is hoping this will dispel further doubts about the solvency of the bank, which was formed after the merger of seven savings banks, including Caja Madrid.
Brussels awaiting formal request for Bankia bailout
Brussels is yet to receive the urgent request for assistance from crisis-stricken Spanish lender Bankia. A spokesperson from the European Commission confirmed on Wednesday that the first wave of capital injections needed to prop up the bank will not be activated until Spain makes an official request for the funds. EU sources say once this "justified and quantified" request arrives from the Bank of Spain, the process of transferring the funds will take "days, or at most one or two weeks."
Sources at the Economy Ministry say negotiations are moving along at a good pace, and that all that is missing is the final step: the official request, which will be sent "in the next few days," according to the same sources.
"The 30 billion euros have already been deposited with the EFSF \[the European rescue fund\] at the disposal of Spain," a source from the Economy Ministry said. "In the last few days we have completed the negotiations with Brussels, which are very advanced now, and all that is missing is the formal request, which we will carry out as soon as possible."
The government says the funds from Europe will serve to plug the hole on Bankia's balance sheet. According to the president of the lender, José Ignacio Goirigolzarri, its financing needs are as high as 19 billion euros.
The government announced in June that it would be requesting a rescue package in order to bail out its troubled banks.