The Spanish government will provide the funds needed to shore up the country's fourth-largest bank, recently nationalized BFA-Bankia, the economy minister said Wednesday.
The bank needs roughly 7.1 billion euros ($8.9 billion) in additional capital, Luis de Guindos told lawmakers.
Speaking to the lower house of Parliament, he said the government plans to sell its controlling stake in BFA-Bankia as soon as possible.
The government took control of BFA-Bankia on May 10, converting into shares the 4.46 billion euro ($5.77 billion) loan the institution received in late 2008 from the state-backed Fund for Orderly Bank Restructuring, or FROB.
The troubled institution's new CEO, Jose Ignacio Goirigolzarri, advocated in favor of the temporary nationalization.
Goirigolzarri and his team need to appoint independent professionals as directors of BFA and Bankia, De Guindos said, adding that the new management has less than a month to present the government with a restructuring plan.
Created by a merger of more than half a dozen savings banks, Bankia holds Spain's largest mortgage portfolio.
Spain's banks have been hard hit by the collapse of the country's real-estate market, which from 1995 to 2007 powered strong economic growth in the Iberian nation.
The 2008 global financial meltdown came as Spain was struggling with the bursting of the property bubble. The ensuing slump has led to numerous business failures and pushed the country's jobless rate above 24 percent.
Nearly half of Spaniards under 25 are jobless and tens of thousands of families have been evicted from their homes after falling behind on their mortgages. EFE