Bailey McCann, Opalesque New York: According to a report from the Financial Times, Spain has made its first cash bank rescue to keep insolvent local bank, Bankia afloat. The loan comes from the Fund for Orderly Bank Restructuring (FROB), an EU fund which has been put in place to help the growing number of troubled European banks. The Bank of Spain which had to approve the deal had been reticent to go along with the capital infusion but faced little choice as bank recently saw large deposit outflows that impacted its balance sheet.
"The operation will be carried out by the FROB subscribing to a capital increase," the FROB said in a statement.
Spain has said that it could request up to 100bn Euro for similar rescues. The country has been having regular bond auctions in hopes of financing their way through some of this, although the FROB has noted that it will step in as it has already with Bankia.
Spainish Prime Minister Mariano Rajoy said in press accounts over the weekend, that the key problem in the Eurozone is that some countries financed themselves at negative rates, whi......................
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