Spain to pump $7.5b Into bank rescue fund

Madrid: The Spanish state is implementing an urgent transfer of 6 billion euros ($7.5 billion) to its bank rescue fund, which controls stakes in lenders including Bankia group, said an official at the Budget Ministry.

The transfer, which was made necessary by a decree in February, will be made over the coming days, said the official on condition of anonymity in line with government practice, in an e-mailed response to questions on Sunday. The transfer to the fund known as FROB will appear in central government budget data once the payment is made, the official said.

Spain is about to boost the capital of the rescue fund after writing down investments in lenders including Bankia group, according to the fund’s annual report dated July 26. The fund posted a net loss of 10.56 billion euros in 2011, sparking a negative equity of 1.86 billion euros.

“It is a fresh show of the deterioration of the financial sector, said Nicolas Lopez, head of analysis at Madrid-based broker MG Valores. “Final losses will be known in a longer term period.”

Spanish governments will detail August 31 rules for lenders to access funds from the European bailout of as much as 100 billion euros that government sought for its banking system in June, Deputy Prime Minister Soraya Saenz de Santamaria said. Spain is introducing new rules to restructure and, if needed, dismantle non-viable financial institutions, said a separate person familiar with the government plans August 23.