Bankia Goes Belly-Up; Bankrupt Spanish Government Steps In To Bail It Out
May 26, 2012 • 11:30AM

This Friday was a triple witching day in Spain. Following in the tradition of JPMorgan Chase, whose admitted losses double every time you blink, Spain's fourth largest bank Bankia announced after markets closed this afternoon, that they need a Spanish government bailout of, not 9 billion euros, as they had said on Thursday, but of 19 billion euros. The government, which nationalized the bank on May 9 and gave it 4.5 billion euros, promptly agreed, bringing the grand total handed over to 23.5 billion ... so far. Trading in Bankia stocks was suspended, and just for good measure 16 of the 18 members of their board of directors were sacked.

Earlier in the day, Standard & Poors had downgraded five Spanish banks, three of them—Bankia, Bankinter and Banco Popular Espanol—into junk status.

Also on Friday, Artur Mas, the president of the autonomous region of Catalunia, the country's richest, told journalist that he was demanding that the central government either give them money, or underwrite their further borrowing on the markets. "We don't care how they do it, but we need to make payments at the end of the month."

Catalunia has to refinance 6.9 billion euros in debt this quarter. All 17 autonomous regions of Spain have to refinance more than 15 billion in the last half of the year. The main holders of that debt are Spanish banks.