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Spanish newspaper ABC reports that the Spanish government will nationalize the troubled lender Bankia this very afternoon once the trading day has ended at 11:30 AM ET.According to the report, the government will convert the €4.465 billion euros it has injected into Bankia’s parent BFA (Banco Financiera de Ahorros) through the FROB (the Fund for the Ordered Banking Restructuring) into company capital. This would increase the likelihood of a merger between the company’s seven troubled caja subsidiaries (cajas are generally small savings banks).
It will also take a stake in BFA, and will control a maximum of 45 per cent of its capital.
The government was expected to announce plans to support the banking system by this Friday.
Officials had previously refused to use public funds to support the banks, but this is obviously a departure from that promise.
Spanish equities appear to be unaffected so far, still trading near their lows of the day, down 3.7 per cent.
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