The Spanish government will not allow any bank or regional government to collapse “otherwise the country would fall,” Prime Minister Mariano Rajoy warned on Monday.
The PM made the comments to the press but failed to calm the markets that had reacted to Spain’s biggest bank bailout of 23 billion euros, handed to Bankia last week.
The Bank of Spain estimates the total of potentially loss-making real estate assets left over from the 2008 housing bust to be around 180 billion euros, of which Bankia holds some €32 billion.
“We are not going to let any region or financial entity fall, because otherwise the country would fall,” he said.
Despite the bailout Bankia shares plummeted losing 13% on the Madrid stock market. It has now lost two-thirds of its value since shares were floated in July 2011.
“We took the bull by the horns because the alternative was collapse,” explained…
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