Bankia stakes suspended with reports of bailout request

Published:  28 May at 6 PM

Shares trading of Spain's Bankia in Madrid has been suspended. Before a board meeting this afternoon, Bankia asked for its shares to be suspended in order to reformulate its 2011 accounts and write up a plan to support its finances.

Bankia has now formally asked the Spanish government for a bailout package of 19 billionn euros ($24 billionn; £15 billion). There were also appeals for financial aid from another Catalonia—Spain’s wealthiest autonomous region.

Catalan president Artur Mas said it did not matter how it was done, but his government needed to make payments by the end of May. The economy cannot recover if a government cannot pay its bills, he argued.

Catalonia, representing one-fifth of Spain’s economy, must now take out 13 billion euros worth of loans this year in order to refinance its maturing debt, along with funding whatever debt it has for 2012.

The regions have been experiencing trouble borrowing funds commercially, so Spain’s central government has called upon the Official Credit Institute (ICO) to offer them a special credit facility.

These credit lines will run out in June, as Spain’s government has promised to produce a new mechanism for offering credit to the regions. However, there has been some anxiety due to reports of disagreement within the Spanish government over what form the guarantees would take.