Spain's government has announced plans to provide the troubled lender Bankia with immediate financial aid after the bank reported losses of 4.4 billion euros (USD 5.6 billion) in the first half of the current year. Spain's Fund for Orderly Bank Restructuring or FROB, an existing bailout fund formed to help the country’s crisis-hit financial sector, said in a statement on Friday that it decided to inject the financial assistance into Bankia after “the accounts declared significant losses.” Bankia was formed in a merger of seven banks in 2011 and was nationalized in May, as a result of its bad property debt problems.
The fund did not state how much capital it would transfer into the ailing bank and its parent group Banco Financiero y de Ahorros SA. However, it said that the aid was an advance loan prior to Spain receiving a package of up to 100 billion euros (USD 126.1 billion) from other eurozone countries.In June, the country formally demanded a rescue bailout in aid from the European Union to save its ailing banking system. Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs. The current economic crisis in Spain has prompted the government to implement reforms in the financial sector. The worsening debt crisis has forced EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered incidents of social unrest and massive protests in many European countries. MR/MA