STOCK MARKET WATCH -- Tuesday, 29 May 2012

[Eugene]

34. One bust bank could bring Spain to its knees, warns prime minister

Source: The Guardian

One bust bank could bring Spain to its knees, warns prime minister

Giles Tremlett in Madrid
The Guardian, Tuesday 29 May 2012

Spain cannot afford to let a single bank or regional government collapse as that would bring the entire country to its knees, the prime minister, Mariano Rajoy, warned on Monday.

In a rare and unexpected appearance before the press, Rajoy failed to calm markets which had reacted nervously to Spain's biggest-ever bailout, the €23.5bn (£18.8bn) rescue of Bankia announced on Friday.

"We are not going to let any region or financial entity fall, because otherwise the country would fall," he said.

The cost of Bankia's bailout has spiralled over the past three weeks and a revision of its 2011 accounts over that period has seen losses at parent company BFA multiplied by 100. On Monday night the company reported the biggest loss in Spain's banking history – of somewhere above €3.3bn (£2.6bn). It had originally declared just €30m in losses.

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Read more: http://www.guardian.co.uk/business/2012/may/28/one-bust-bank-spain-pm-mariano-rajoy