MADRID – Bankia, the nationalized Spanish bank which had to reassure saverslast week to fend off a reported run on its deposits, needs tostrengthen its capital defenses by as much as 7.5 billion ($9.56billion), the country's economy minister said Monday. The minister, Luis de Guindos, said Bankia needed to find around 7 billion to 7.5 billion to meet the Spanish government's newprovisioning requirements designed to strengthen the country'sbanking industry against further economic shocks. If Bankia cannotraise the money itself, it will have to tap the state bank rescuefund, FROB. This could increase the government's bill for keepingBankia afloat to 12 billion. Like other banks, Bankia has until June 11 to tell the governmenthow it plans to come up with the money for stronger defenses. De Guindos Monday also dismissed comments from the new FrenchPresident Francois Hollande that Spain's banks might need moneyfrom European recapitalization funds to stay in business. Theminister said Hollande "probably knows the French banking sectorbetter than the Spanish one." Spain is in the eye of the storm of the eurozone debt crisis amidworries that its banks are overexposed to an imploded real estatebubble and the government, already fighting recession and a nearly25 percent jobless rate, could not afford to bail them out if itneeded to. A major concern is that bank failures might swamp publicfinances and that the government will be unable to carry throughits austerity measures and reforms. The government has introduced the raft of harsh cutbacks aimed atslashing its deficit from 8.9 percent of economic output to belowthe maximum level set by the European Union of 3 percent by 2013.For this year, the goal is 5.3 percent. The interest rate of Spain's benchmark ten-year bond, which can beused as a measure of investor confidence, was up a further 0.03percentage point to 6.23 percent Monday — anything above 7percent is widely-considered to be unsustainable in the long-run. Spain has essentially taken over Bankia by turning a 4.5 billionaid injection made in 2010 into shares in Bankia's parent company.Many Spanish lenders are heavily exposed to Spain's imploded realestate bubble, and Bankia — the result of a merger of sevensavings banks — is the worst off of all, with 32 billion intoxic assets. Last week Bankia had to fend off a newspaper report that its saverswere rushing to withdraw their funds since the bank was taken overby the government. Its shares dropped as much as 27 per cent onThursday, before recovering the following day. Bankia's shares weredown 0.8 per cent in afternoon trading Monday at 1.74. De Guindos' ministry also announced Monday that two independentconsulting firms have been hired to carry out stress tests ofSpanish banks. They are Oliver Wyman and Roland Berger StrategyConsultants GmbH. They are to start work immediately and finish andfile a report in the second half of June. The ministry said the goal of this is to "increase transparency andclear away once and for all" doubts about the assets held bySpanish banks. In a second phase of this operation, three auditing companies willbe hired by the end of May to evaluate how banks are assessing thequality of their assets and making provisions for them, theministry said in a statement. This process will take longer and theresults of the studies will be known "in the next few months." De Guindos was speaking following the announcement by the Spanishgovernment late Friday that Spain's 2011 budget deficit was higherthan expected — the second upward revision in recent months.The minister said the increase in the 2011 deficit figure from 8.5percent of national income to 8.9 percent was due to overspendingby four regions, which had not been "totally transparent" inproviding figures initially. The minister also said the Spanish economy, which has contracted by0.3 percent in each of the past two quarters, will shrink by aboutthe same amount in the second quarter of 2012. The forecast is forit to decline 1.7 percent for the year. The e-commerce company in China offers quality products such as China Whole House Filter Systems , China Water Filters For Washing Machines, and more. For more , please visit Commercial Water Purifier today!
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