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MADRID (AP) — Concern over troubled Spanish lender Bankia and the government's ability to come up with the €19 billion
($23.8 billion) bailout the bank needs to bolster its defenses sent the nationalized lender's stock price plummeting and
Spain's borrowing costs soaring Monday.
Shares in Bankia fell 28 per cent on opening in Madrid on Monday — the bank's first day back on the stock exchange following
its announcement Friday that it would need a bigger bailout than expected to shore itself up against its bad loans. The shares,
which recovered slightly by midday to trade 14 percent down, had closed at €1.57 before trading was suspended Friday.
Among the chief concerns surrounding Bankia's request for state aid — the largest in Spanish history — is just how Spain plans
to fund it. The country's borrowing costs have risen sharply over the past few weeks. On Monday, the interest rate, or yield, for
10-year bonds on the secondary market — a key indicator of market confidence — was up 13 basis points by midday to 6.42
percent.
A rate of 7 percent is considered unsustainable over the long term and there is concern that Spain might soon be pushed join the
ranks of Greece, Ireland and Portugal and seek an international bailout.
<iframe width="560" height="315" src="http://www.youtube.com/embed/bHSG6PmYL7A" frameborder="0" allowfullscreen></iframe>
($23.8 billion) bailout the bank needs to bolster its defenses sent the nationalized lender's stock price plummeting and
Spain's borrowing costs soaring Monday.
Shares in Bankia fell 28 per cent on opening in Madrid on Monday — the bank's first day back on the stock exchange following
its announcement Friday that it would need a bigger bailout than expected to shore itself up against its bad loans. The shares,
which recovered slightly by midday to trade 14 percent down, had closed at €1.57 before trading was suspended Friday.
Among the chief concerns surrounding Bankia's request for state aid — the largest in Spanish history — is just how Spain plans
to fund it. The country's borrowing costs have risen sharply over the past few weeks. On Monday, the interest rate, or yield, for
10-year bonds on the secondary market — a key indicator of market confidence — was up 13 basis points by midday to 6.42
percent.
A rate of 7 percent is considered unsustainable over the long term and there is concern that Spain might soon be pushed join the
ranks of Greece, Ireland and Portugal and seek an international bailout.
<iframe width="560" height="315" src="http://www.youtube.com/embed/bHSG6PmYL7A" frameborder="0" allowfullscreen></iframe>
