Brussels, 08/05/2012 (Agence Europe) - On Tuesday 8 May 2012, Euro Commissioner Olli Rehn commented on the various problems facing the Spanish economy, which is preparing to bail out Bankia with around €10 billion to help it deal with its toxic assets. At an unveiling of a European Commission statement for Europe Day (9 May, see related article), Rehn said the key for boosting confidence in Spain is dealing with the immediate budget and financial problems, particularly the problems facing building societies and regional authority spending, while pursuing structural reforms with absolute determination.
Bankia is the 2010 merger of seven different building societies and is the Spanish bank worst affected by the collapse of the property bubble (having €37.5 billion worth of assets in 2011 for €184 billion worth of loans). Spanish Prime Minister Mariano Rajoy on Monday accepted the possibility of a bail-out for the bank sector, which has already received more than €15 billion from a special rescue fund. Rajoy said on Spanish radio station Onda Cero that the last thing he wanted to do was inject taxpayer's money, but, if it was necessary and only as a last resort, he would not rule it out. On Friday, the government will pass a special law to introduce tighter funding rules for banks. In January 2012, it required Spanish banks to set aside a total of more than €50 billion in provisions (see EUROPE 10525). (MB/transl.fl)