Ministers to Discuss $125 Billion in Spain Bank Support [WSJ]


Euro-zone finance ministers will discuss a commitment to provide as much as €100 billion ($125 billion) in support for Spain’s ailing banking sector on Saturday afternoon, an official from a euro-zone country said Saturday.

The official said senior finance-ministry officials spent Saturday morning and early afternoon preparing a draft statement that euro-zone ministers will discuss in a conference call.

Spain, which is reeling from a real-estate meltdown, has not requested aid for its financial companies yet, the official said, adding that no disbursements are likely to come before the end of the month, when two independent consulting firms have finished their assessment of the country’s banking sector.

However, the euro zone agrees that “quick and radical action” targeted at Spain’s banking sector is necessary, the official said.


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Obama signs Billion-dollar Bailout For Corp. Jet builders []

President Obama on Wednesday signed a reauthorization of the Export-Import Bank that would raise its lending authority 40 percent to $140 billion by 2014 and pressed Congress to pass a list of other top White House priorities aimed at creating jobs and boosting the economy.

Enough Republicans came to the 78-year-old bank’s aid to move the bill to the president’s desk earlier this month after conservatives inCongress assailed it for meddling in the free market.

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Ponzi Financing in Greece Continues; Greek Banks Receive €18bn Transfer [Mish]

Greek banks have been shut off from regular ECB liquidity operations due to lack of sufficient collateral. Today the Banks have that collateral thanks to a disbursement of funds from the EFSF which in turn will be used as collateral for more loans from the ECB.

If this makes little sense to you it is because it should not make any sense to anyone. It is another act of desperation in a long line of desperate acts.

Please consider Greek banks receive €18bn transfer

 Greece’s four largest banks received a €18bn transfer on Monday as the first instalment of a recapitalisation plan agreed as part of the country’s second bailout by the EU and the International Monetary Fund.


The Fabled Greek Mega-Bailout [Azizonomics]


In a truly eyebrow-raising CNBC interview, Matthew Lynn alleges that Europe shall be saved! (As if by the grace of God!).

With Europe on the brink yet again Germany will act.

The Greeks can’t carry on with the austerity being imposed on them. No country can be expected to endure annualized falls in GDP  of 7 percent or more,” he said, “and 50 percent youth unemployment for years on end.

On Tuesday we learned that the Greek economy shrank by another 6.2 percent in the latest quarter. It simply isn’t acceptable” Lynn said.

But Germany and the rest of the EU could come up with a Marshall Aid-style package for Greece. Very little of the bail-out money so far has gone to the Greeks. It has all gone to the bankers.

Forget talk of a ‘Grexit’. There will be a mega-bail-out—a ‘Grashall Plan’—instead.

And when it happens, the markets will rally on the news.

Who else would publish this? (That’s a redundant question — who else, besides J.P. Morgan and maybe a few government agencies, wouldn’t have fired Jim Cramer after what he said about Bear Stearns?)

At various stages in the last two years everyone from China, to Germany, to the Fed to the IMF, toMartians, to the Imperial Death Star has been fingered as the latest saviour of the status quo. And so far — in spite of a few multi-billion-dollar half-hearted efforts like the €440 billion EFSF —  nobody has really shown up.

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It’s official: the government nationalizes BFA and control 45% of Bankia

Translated by Google

The Economy Ministry has revealed that 100% nationalize Bank Savings Financial, which control 45% of Bankia, while it has announced in a statement that the state will provide the capital “strictly necessary” to clean up group. Download the statement of Economics (. PDF) .

The department heads explained Luis de Guindos that will drive the process of converting the loan into shares of 4.465 million which granted the state the group in late 2008. As a result of this conversion, the State, through the restructuring fund Banking Ordinance (FROB) will own 45% indirect stake in Bakia, which will control.

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The Bankia State support now amounts to 33,000 million euros

The Bankia State support now amounts to 33,000 million euros since the beginning of the financial crisis in 2008. Most of this figure corresponds to the guarantees that both the matrix, Finance and Savings Bank, as banks that participated in the merger have asked the Treasury and has yet to return. For this concept to 28.583 million plus interest. Despite the multimillion-dollar aid, which are complemented by the 2,500 million provided by the Guarantee Fund of Banco de Valencia, the last government a restructuring plan of the entity that involve the injection of public funds by up to 10,000 million.

The guarantees were made available by the Government sector with a view to overcoming the financial difficulties that prompted the crisis.Then, unlike now, there was concern for the deficit.

Thanks to them, the State charged an interest of between 2.5% and 5.5% and has already bagged a total of 400 million. Against the total outstanding pending return across the sector, amounting to some 81,000 million, Bankia has requested 35% above its weight in the whole Spanish financial system.

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Bankia, the eighth bank nationalized since the start of the crisis

The fourth largest financial institution and the most exposed to the battered brick industry will be controlled directly by the State, which will be the hegemonic shareholder of Bank Savings Financial. “The Government will provide the capital that is strictly necessaryfor accurate write-downs,” Economics claimed in a statement tonight.

The matrix Bankia this week has been protagonist of economic news with the relay forced Rodrigo Rato first and the ‘cry for help’ from their new president, Jose Ignacio Goirigolzarri-after. Bankia has thus become the eighth entity that has had to engage the Government since the crisis began.

The first action of the new Board of Directors has been to propose that the state nationalize this entity. Shortly thereafter, the Ministry of Economy and Competitiveness confirmed that 100% nationalize Bank Savings Financial, which is the main shareholder of Bankia.

According to the note Guindos department, “drive” the process of conversion of the debt of the bank’s actions “as it is considered unlikely, given the status of the entity and the group that the repurchase of shares preference can be completed within 5 years. “

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Spain to Spend €7bn-€10bn (It Doesn’t Have), Bailing Out Bankia, the Nation’s 3rd Largest Bank [Mish]


After insisting no bailouts would be needed, Spain to spend billions on bank rescue

 Spain is planning a state bail-out of Bankia, the country’s third biggest bank by assets, in a move likely to involve the injection of billions of euros of public money into the troubled lender.

In an abrupt reversal of policy, the Spanish government, which had previously insisted that no additional state money would be needed to clean up the country’s banking sector, confirmed that an intervention was being prepared.

Some bankers and analysts have argued that BFA, Bankia’s parent company which controls the listed entity and houses the combined group’s worst quality assets, needs significantly more capital.

BFA said last week it had renegotiated €9.9bn of assets last year to avoid them being classified as bad loans, equivalent to 5 per cent of the bank’s €188bn loan book.

One adviser to Spanish banks and government agencies said that if the amount Madrid injected into Bankia was not sufficient, and did not involve a much improved management of its bad assets, then the plan risked achieving little.

“Just injecting capital would be the equivalent of rearranging the deck chairs on the Titanic,” the person said. “I think Spain has not admitted to itself just how weak some of its banks actually are and how serious the situation is.”


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The Spanish Bank Bailout Begins [Zerohedge]

Tyler Durden's picture

Submitted by Tyler Durden

It was only a matter of time before the next bank bailout began despite all those promises to the contrary. Sure enough, as math always wins over rhetoric and policy, earlier this morning the shot across the Spanish bow was fired after PM Rajoy did a 180 on “no bank bailout” promises as recent as last week. From Dow Jones: “Spain may pump public funds into its banking system to revive lending and its recessionary economy, Prime Minister Mariano Rajoy said Monday, signalling a policy U-turn. The government had pledged to not give money to the banking industry that is struggling in the wake of a collapsed, decade-long, housing boom. “If it was necessary to reactivate credit, to save the Spanish financial system, I wouldn’t rule out injecting public funds, like all European countries have done,” Rajoy said in interview with Onda Cero radio stations. The weakness of Spain’s banks is weighing on the economy that contracted 0.3% in the first and fourth quarters, meeting most economists’ definition of a recession. The unemployment rate is at an 18-year high 24.4%, data showed April 27. Banks have sharply reined in credit in the face of rapidly growing bad debt and problems getting finance on international markets.” And explicitly we learn that Spain will inject EU7 bln of public funds via contingent-capital securities to support BFA-Bankia, El Confidencial reports, citing Economy Ministry officials it doesn’t name. It actually sounds cooler in the native: “El Estado inyectará 7.000 millones de dinero público para salvar BFA-Bankia.” So it begins. Which also means that the “Bad Bank” idea is about to be launched. So far so good… The only problem is that like the EFSF, like the ESM, like the IMF, all those “deus ex machina(e)” also had to find funding of their own… and failed: it is one thing to intend to rescue the system. It is another to find the cash to do it with.

In the meantime, the process has already commecned:


From Reuters:

Spanish Prime Minister said on Monday he would use public funds to rescue the country’s banks, but only as a last resort. He said an announcement on government plans for the banks would come on Friday.

Spain has already spent more than 18 billion euros ($23.61 billion) to clean up its banks, which were highly exposed to a property sector crash four years ago.

The banks have been forced into several waves of mergers and to recognize more than 50 billion euros in losses related to property lending and assets.

A Spanish government and Bank of Spain plan to reform Bankia will involve major changes at the bank’s management, government and Bank of Spain sources told Reuters on Monday.

“The plan is being finalised by the Economy Ministry and the Bank of Spain. It will include major changes in the management,” a government source said.

The source also said the Spanish government would approve on Friday the guidelines for setting up holding companies to park and sell off toxic real estate assets, including a framework to create 10- to 15-year “bad banks”.

A source from the Bank of Spain said that the plan for Bankia, which is likely to stick to its stand-alone strategy after the intervention, includes the possibility of asset sales.

“The possibility of strenghtening the balance sheet through asset sales is on the table,” the source said.


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