Bank president moves to calm fears
Concern about the health of Europe's banks is a key part of the region's financial crisis. Spanish banks are seen as particularly shaky because they were heavily exposed to soured investments such as defaulted mortgage loans and devalued property.
The big fear is that if Greece eventually leaves the euro, confidence in other financially weak countries like Spain and Italy could fall, causing the value of their bonds to drop. Ultimately, the worry is that it could undermine confidence in the system and create bank runs.
Bankia's request for recapitalisation came as Standard & Poor's downgraded it and four other Spanish banks to junk status because of uncertainty over their restructuring. Such a move could make it more difficult for the banks to borrow the money the need to turn themselves around.
Goirigolzarri said his main immediate concern was to recapitalise Bankia, and he would later decide on how to begin issuing credit. "We are recapitalising. We want to expand business, so expanding credit, that is in our interest," he said.
The bank's shares have become subject to turbulent trading. Yesterday, Spain's stock market regulator suspended them as Goirigolzarri and his board of directors met to assess how much aid to ask for.
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