Bad bank is part of ambitious new banking law Spain’s conservative government promises will save ailing finance sector
Spain will inject emergency capital into the country’s biggest ailing bank, Bankia, as it puts into place reforms to allow loss-making banks to receive eurozone bailout money.
The move came after Bankia admitted losing more than €4bn (£3.168bn) in the first half year and as the conservative government of prime minister Mariano Rajoy delayed a decision on losses to be absorbed by small investors in bailed out banks.
The Fund for the Orderly Bank Restructurin (Frob) said Bankia’s restructuring plan should be ready by October, allowing eurozone rescue money to arrive in November. “While the restructuring process is completed, the Frob intends to inject capital shortly,” it said. This would be an advance on the eurozone money.