Spanish Whipping Boy (EWP) Gets a Day Off As Bailout Looms Large in Madrid
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Reuters is reporting that the government of Spain plans to inject funds into beleaguered lender, Bankia group, by buying contingent-capital securities. The government in Madrid is hoping to beat back speculation that it will need outside funds in the form of an international bailout, opting instead to handle its own affairs.
The Bankia group has more Spanish real estate on its books than any other bank in the region, estimated at 38 billion Euros in 2011. The bank was also singled out in an IMF report last month that urged banks in the area to strengthen their balance sheets.
Lorenzo Bernarldo de Quiros, an economist in Spain, said "If the Bankia situation is not resolved property, it is going to put in question the entire financial reform in Spain."
iShares MSCI Spain Index (NYSE: EWP), an ETF which tracks Spanish stocks, was up 2 percent on the news after dropping 10 percent in the past month.
The Bankia group has more Spanish real estate on its books than any other bank in the region, estimated at 38 billion Euros in 2011. The bank was also singled out in an IMF report last month that urged banks in the area to strengthen their balance sheets.
Lorenzo Bernarldo de Quiros, an economist in Spain, said "If the Bankia situation is not resolved property, it is going to put in question the entire financial reform in Spain."
iShares MSCI Spain Index (NYSE: EWP), an ETF which tracks Spanish stocks, was up 2 percent on the news after dropping 10 percent in the past month.
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