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Bankia to receive emergency funds: source

Monday, September 03, 2012 - 02:34

Sep 3 - Nationalised Spanish lender Bankia will receive up to 5 billion euros in emergency funds by the middle of September, according to a source with knowledge of the matter. Joanna Partridge reports

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Some relief for Bankia - Spain's most troubled bank. The nationalised lender will receive a capital injection of up to 5 billion euros from Spain's national bank rescue fund according to a source with knowledge of the situation. The source says Bankia should receive that money by 14 September. The extent of the bank's problems was highlighted again on Friday when it posted losses of 4.4 billion euros for the first half of the year. Chris Hughes from Reuters Breaking Views isn't sure Spain could help out more banks this way. SOUNDBITE: Chris Hughes, Deputy Editor, Reuters Breaking Views, saying (English): "The sums involved here are kind of swallowable. Could it be repeated? It would be probably quite tricky. For now, this looks like a temporary reponse to the problem it buys them time. It may actually be that we'll see another recap further down the line." Spain has already asked for a 100 billion euro rescue of its financial sector. Now Prime Minister Mariano Rajoy has said Madrid may ask for more, and doesn't expect additional aid to come with new conditions. He wants to see the details of the European Central Bank's bond buying programme before deciding. Peter Dixon from Commerzbank thinks Spain's bank bailout is just the beginning. SOUNDBITE: Peter Dixon, Economist, Commerzbank, saying (English): "It's hard to know exactly where the Spanish situation is going to end, because I think as we saw in the case of Ireland, once you start to look below the surface at the state of the banks and the impact this is going to have on the rest of the economy, you then start to open up a whole can of worms and we just simply don't know how big that can of worms is and exactly how dreadful the position in Spain is. One thing is for sure, Spain is not going to be able to resolve its problems by itself, it's going to need a huge amount of support and financial aid from the rest of the euro zone." Spain is already struggling to implement more austerity measures as it tries to reduce its debt, bring down its borrowing costs and get the economy moving. That's why Rajoy is mindful of the conditions that would come with more aid. But it pits him against his euro zone neighbours like Germany, who only want the ECB to buy struggling countries' debt if the IMF imposes conditions. That topic will undoubtedly be on the agenda when German Chancellor Angela Merkel travels to the Spanish capital later this week. Joanna Partridge, Reuters

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Bankia to receive emergency funds: source

Monday, September 03, 2012 - 02:34