Troubled Bankia Asks Spain For £15bn In Aid

Spain's fourth largest bank Bankia has asked for 19bn euros (£15bn) in state aid - on top of a previous injection of 4.5bn euros.

Jose Ignacio Goirigolzarri, the bank's president, said the bailout would "reinforce the solvency, liquidity and solidity of the bank".

In a statement, the struggling lender said it would ask Spain's bank restructuring fund FROB for a capital increase.

The Spanish market suspended trade in the bank's plunging shares ahead of the announcement.

Bankia was also one of five Spanish banks downgraded by ratings agency Standard and Poor's on Friday.

The troubled lender was part-nationalised several weeks ago.

Its shares have been whipped about violently in recent weeks on fears it could succumb to the massive losses it has built up in in bad loans in the country's collapsed real estate sector.

Bankia , which holds 10% of Spaniards' deposits, is seen as the weak spot in Spain's fragile banking system, bearing the brunt of loan losses stemming from the property crash in 2008.

The Spanish government said earlier in the week that it would provide any capital outlined in the new management's recapitalisation plan through the state-backed restructuring fund.

The prospect looked ever more likely as Catalonia, the country's wealthiest autonomous region, said it needs financial help from the central government as it is running out of options for refinancing its debt, worth more than 13bn euros (£10.4bn),this year.

"We don't care how they do it, but we need to make payments at the end of the month. Your economy can't recover if you can't pay your bills," Catalan President Artur Mas said.

The region's credit facility from the central government is due to run out in June but it has pledged to find a new solution. 

Last year many of Spain's 17 regions financed their debt by falling behind in payments to providers such as street cleaners and hospital equipment suppliers. 

"Irrespective of what happens to Greece, Spain remains a very significant threat to the whole coherence of the eurozone, and we did have a taste of that again today with the suspension of Bankia shares," Jane Foley from Rabobank told Sky News. 

Elsewhere on the stock markets, European shares rallied after stinging losses earlier in the week, and the FTSE 100 closed having made a gain on the week despite continuing eurozone debt fears.

The latest voter poll from Greece showed anti-bailout leftist Syriza party was maintaining its lead ahead of elections on June 17 which are thought critical to the country's continued membership of the euro.

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