“Spain is considering pumping its own money into Bankia group to re-capitalize the country’s biggest nationalized lender rather than use the emergency portion of a 100 billion-euro ($125 billion) bailout from the European Union, two people with direct knowledge of the matter said.
This would allow Spain to put off forcing Bankia group’s junior debt holders to bear part of the rescue cost, said the people, who asked not to be identified because the negotiations are private. European officials backed burden sharing in the talks because it would limit the need for public money, the people said.
“The EU is telling the Spanish government that if they don’t produce this haircut, the money will have to put up by” Spain, said Alejandro Ruyra, an analyst at Kepler Capital Markets inMadrid, speaking on Bloomberg TV’s The Pulse. “The question is, does the Spanish government have that much money?”Twitter