25 May 2012
The already troubled bank, Bankia, today asked for yet another loan from the Spanish government. Bankia said that it would need another 19 billion euros ($24 billion) more than it had originally anticipated.
This is much more than the Spanish government had expected to have to pay when they stepped in and partially nationalized Bankia earlier this month.
Part of the problem stems from the fact that Standard & Poor's (the credit rating agency) recently demoted Bankia's rating--basically giving it a junk status. Consequently, Bankia is having trouble borrowing money in order to stabilize the bank because no one wants to loan them money.
Unfortunately, now that the Spanish government has partially nationalized Bankia (and taxpayers now own 45% of shares in Bankia), the government can't let Bankia go under. The government has too much invested in the bank and the Spanish government doesn't want to appear unstable to investors or the European Union.
However, the problem with Bankia is leading many in Europe to worry if Spain can resolve the banking situation without a EU bailout.
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