Bankia goes bust (quick, get your cash out) and another 4,5 billion of public cash is counted out

Bankia, the new Spanish bank made out of a shotgun wedding of no fewer than seven failed Spanish caja de ahorros, and the bank with the largest exposure to real estate debt in the country (37,500 million euros), has seen its share price sink through the floor after it was leaked that Bankia is bankrupt.

Expansion, the financial paper, tells us this morning that emergency talks between Madrid and the Bank of Spain are culminating in a 4,500 million euro plan to either nationalise the bank or split it into two, with the state taking over the “bad debt” of the bank.

Rajoy confirmed this morning that yes, if necessary, he will bail out and nationalise the bank, but it is “his least favourite option”.

Bankia was formed by the administration after merging the assets of Caja Madrid, Bancaja, Caja Segovia, Caja Ávila, Caja Canarias, Caja La Rioja & Caja Laietana, all Spanish savings banks that failed during the credit crunch.

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