Spain bails out Bankia, seeks plan for troubled regions

Spain announced a 9-billion-euro ($11 billion) bailout for troubled lender Bankia on Wednesday, while also seeking ways to help its highly indebted regions meet huge refinancing needs that threaten to drag the country deeper into the eurozone crisis. The country's weak banks and overspending regions are at the heart of the European debt crisis due to concerns that expensive bail-outs of ailing lenders and regions could force the country to seek international aid. Losses at Bankia, Spain's fourth largest bank, are central to investor fears that the fragile financial system could become more vulnerable as default rates rise in a recession. Economy Minister Luis de Guindos told a congressional committee that the state would have to put at least 9 billion euros into saving Bankia, which he said would be fully nationalised in the process. At the same time government sources said de Guindos and other top officials were at odds over how to help the country's 17 autonomous regions refinance 36 billion euros in debt that comes due this year. Bankia's new management team will undertake a complete assessment of the lender's capital needs and will present its plan in mid-June, de Guindos said. The government will recapitalise Bankia's parent group BFA using the state-backed bank restructuring fund, the FROB, and then will fund Bankia through a capital increase including preferential shares for existing shareholders, he said. He said the Bankia rescue would include 7.1 billion euros in provisions for losses from bad loans and 1.9 billion euros in capital buffers, as well as address issues flagged by Bankia's auditors. The clean-up of Bankia and BFA, which account for 10 percent of deposits in Spain, would take care of most of the problems in the country's banking system, he said. "I insist BFA-Bankia is a specific case and it's not correct to extrapolate its problems to the rest of the Spanish financial system," he told lawmakers. Bankia is the most exposed of Spain's banks to losses stemming from a 2008 property crash. But economists said the focus had now moved on the banking sector as a whole. "The market has moved beyond Bankia. How much Bankia will get in aid is not going to make a big difference," said Martin van Vliet, senior economist at ING. "The question is now about the long-term solvency of parts of Spain's banking system, especially what is going to happen with mortgage loan default. This concern is not being addressed." NO EXTERNAL AID Prime Minister Mariano Rajoy reiterated on Wednesday that Spain would not seek external funds to bail out its banks. "The government has no interest and no intention in accessing any funds from the European Union or any other organisation," Rajoy said following a meeting with French Prime Minister Francois Hollande on Wednesday. The government has picked Goldman Sachs to value Bankia and consultancies Oliver Wyman and Roland Berger were hired to audit other banks' loan books, as bad loans have risen to their highest in 18 years. Spain has chosen outside auditors to reassure investors and European Union leaders, who were meeting at a summit on Wednesday, that Madrid has the situation under control. A leading banking industry group, the Institute of International Finance (IIF), has said Spain's banks could need another 76 billion euros to cover losses as bad debts might rise as high as 260 billion euros. Economists fear the number of Spaniards defaulting on their mortgages could rise given the country's recession-bound economy and sky-high unemployment of 24 percent. The Spanish benchmark 10-year bond traded at a 6.2 percent yield on Wednesday, not far off the 7 percent level that is seen as unsustainable for a country's finances. REGIONAL DEBTS New budget plans from Spain's 17 autonomous communities revealed that they have 28 billion euros of bank loans coming due this year, along with 8 billion euros of bonds that mature in 2012. Many of the autonomous regions are virtually blocked from financing themselves on public debt markets due to the high rates they would have to pay. Some have seen the credit rating on their debt cut to junk status. Spain's government last week admitted its 2011 public deficit was higher than it had previously reported after three regions revealed higher spending last year than they had earlier reported. Two government sources said the central administration now aimed to put forward a new mechanism to back regions' debt as soon as early June. But, the sources said, de Guindos and Treasury Minister Cristobal Montoro disagreed on the final form the new instrument should take. De Guindos favours a centralised mechanism which would control and issue debt for the regions. Montoro would rather see a less intrusive instrument which would fall under the umbrella of his ministry, possibly based on credit lines from the central government to regions which meet their deficit targets.

Three killed in northern Italy earthquake

Three people have been killed in a 5.9-magnitude earthquake that struck northern Italy near Bologna, according to reports. The quake that struck at just after 4am local time was centred 21.75 miles north-northwest of Bologna at a relatively shallow depth of six miles, the US Geological Survey said. Italian news agency Ansa, citing emergency services, said two people were killed in Sant'Agostino di Ferrara when a ceramics factory collapsed. Another person was killed in Ponte Rodoni do Bondeno. In late January, A 5.4-magnitude quake shook northern Italy. Some office buildings in Milan were evacuated as a precaution and there were scattered reports of falling masonry and cracks in buildings. The tremor was one of the strongest to shake the region, seismologists said. Initial television footage indicated that older buildings had suffered damage. Roofs collapsed, church towers showed cracks and the bricks of some stone walls tumbled into the street during the quake. As dawn broke over the region, residents milled about the streets inspecting the damage. Italy's Sky TG24 showed images of the collapsed ceramics factory in Sant'Agostino di Ferrara where the two workers were reportedly killed. The structure, which appeared to be a hangar of sorts, had twisted metal supports jutting out at odd angles amid the mangled collapsed roof. The quake “was a strong one, and it lasted quite a long time”, said Emilio Bianco, receptionist at Modena's Canalgrande hotel, housed in an ornate 18th century palazzo. The hotel suffered no damage and Modena itself was spared, but guests spilled into the streets as soon as the quake hit, he said. Many people were still awake in the town since it was a “white night”, with shops and restaurants open all night. Museums were supposed to have remained open as well but closed following the bombing of a school in southern Italy that killed one person. The quake epicentre was between the towns of Finale Emilia, San Felice sul Panaro and Sermide, but was felt as far away as Tuscany and northern Alto Adige. The initial quake was followed about an hour later by a 5.1-magnitude aftershock, USGS said. And it was preceded by a 4.1-magnitude tremor. In late January, a 5.4-magnitude quake shook northern Italy. Some office buildings in Milan were evacuated as a precaution and there were scattered reports of falling masonry and cracks in buildings. In 2009, a devastating tremor killed more than 300 people in the central city of L'Aquila.

‘Save euro’ plea to Germans as Spain slumps

BRITAIN yesterday piled pressure on German Chancellor Angela Merkel to save the euro. 6 comments Related Stories PM: Make or break for euro HE to issue plea to Merkel to fork out as only way to stave off meltdown New French Pres gets a soakingFrench warning for CameronSarky poll malarky will leave PM narky David Cameron and Chancellor George Osborne said she must use her financial clout to stop the single currency collapsing. The PM hammered the message home in emergency talks via video-link with Mrs Merkel and French president Francois Hollande. It came as the chaos in Greece spread to Spain — with fears of a run on banks in both countries. Greeks have taken £560million from local banks in the past week. And yesterday Spain’s Bankia bank was forced to deny reports customers had taken £800million out of its coffers in the past seven days. Last night the fears hit Santander UK as credit rating agency Moody’s downgraded the bank along with its Spanish owner and 15 other Spanish banks. And credit agency Fitch downgraded Greece on fears it will be booted out of the Eurozone. Earlier, Mr Osborne said the Treasury had drawn up emergency plans to cope with Greece quitting the euro. He told MPs: “Britain will be prepared for whatever comes.” Mr Cameron had warned countries such as Greece and Spain can only survive if richer countries did more to “share the burden of adjustment”. He also backed Eurobonds to raise billions to prop up crisis-hit countries — a proposal that would have to be bankrolled by Berlin. After the video chat, a Downing Street spokesman said the PM urged the eurozone to take “decisive action to ensure financial stability and prevent contagion”.

Spain’s banking crisis reached Britain’s high streets last night when the credit rating of Santander UK was cut.

In a sweeping reassessment, ratings agency Moody’s announced in Madrid that it is downgrading 16 Spanish banks because it could not be sure of the ability of the country’s government to provide the necessary support.

Santander UK was among the banks highlighted after the ratings agency took aim at its parent Banco Santander, based in Spain. 

The Spanish banking crisis has hit the British high street, with the news that Santander has had its credit rating cut

Santander is one of the biggest players in UK retail banking, having taken over the former Abbey National, Alliance & Leicester, Bradford & Bingley and most recently the English branches of the Royal Bank of Scotland.

The new lower A2 credit rating is certain to be a cause of anxiety to Santander UK’s millions of British customers. 

Nevertheless, they can be confident that their deposits up to £85,000 are guaranteed by the British government should there be a loss of confidence.

Brink's Mat the reason that Great Train Robber was shot dead in Marbella

The Brink’s-Mat curse even touched on the Great Train Robbery gang of 1963. One of them, Charlie Wilson, found himself in trouble when £3 million of Brink’s-Mat investors’ money went missing in a drug deal. In April 1990, he paid the price when a young British hood knocked on the front door of his hacienda north of Marbella and shot Wilson and his pet husky dog before coolly riding off down the hill on a yellow bicycle.

British tourist falls to her death from hotel balcony in Magalluf

23 year old British tourist has fallen to her death from the third floor balcony of her hotel in Magalluf, Mallorca. Emergency sources said it happened at 4.25am Saturday morning at the Hotel Teix in Calle Pinada. Local police and emergency health services went to scene. After 20 minutes of an attempt to re-animate her heart, the woman was pronounced dead. Online descriptions for the Hotel say it is the best place to stay of you are looking for non-stop partying, adding it not suitable for families.