Spain bailout fund takes 45% stake in Bankia as crisis deepens

Spain has taken a 45% stake in Bankia, the country's third largest bank, following another day of sharp falls in the country's equity markets and gains in its bond yields.

The Bank of Spain said Bankia and BFA, its parent company, had informed it the conversion of €4.47bn of state aid in the bank into ordinary shares was "the most advisable option for strengthening the [bank's] financial soundness". As a result of the conversion the Frob, Spain's bank bailout fund, will now hold a 45% stake in Bankia. Spain's ministry of economy said the move was "a necessary first step to ensure its solvency, the tranquility of depositors and dispel doubts about the entity's capital needs". The move came after another bleak day for Spanish markets. The IBEX index cl...