Finance

Finance

Spanish prime minister insists no bailout required for country

29 May 2012 08:04 (UTC +04:00)

Baku - APA-Economics. Conservative Spanish prime minister Mariano Rajoy insisted today that the countryâ€™s banking sector would not need an international rescue as concern over the bailout of nationalised lender Bankia sent its stock price plummeting while Spainâ€™s borrowing costs soared, APA reports citing Associated Press.

â€œThere will be no rescue of the Spanish banking sector,â€ Mr Rajoy said.

But he added that the government had no choice but to bail out Bankia, which has been crippled by Spainâ€™s real estate slump.

â€œWe took the bull by the horns because the alternative was collapse,â€ said Mr Rajoy, stressing that Bankia clientsâ€™ savings were now safer than ever.

Bankia, Spainâ€™s fourth-largest bank, is estimated to have â‚¬32bn in toxic assets and was effectively nationalised earlier this month when the government converted â‚¬4.5bn in rescue funds it gave last June into shares.

The lenderâ€™s shares fell 28% on opening in Madrid today â€“ Bankiaâ€™s first day back on the stock exchange following its announcement on Friday that it would need the â‚¬19bn in state aid to shore itself up against its bad loans, a far bigger bailout than expected. The shares, which recovered slightly in the afternoon, closed 13.4 % lower at â‚¬1.36.