Spain's troubled Bankia seeks $24bn bailout

Fourth-largest Spanish bank asks for rescue package after its shares are suspended and downgraded by S&P's to "junk".

The Spanish government on Thursday had announced a $11bn bailout package for Bankia [AFP]

The board of directors of Spain's troubled bank, Bankia SA, has said it has agreed to ask for $23.8bn in state funds. In a statement released late Friday the bank's president, Jose Ignacio Goirigolzarri said the recapitalization "reinforced the solvency, liquidity and solidity of the bank". The decision came on the same day as credit rating agency Standard & Poor's downgraded Bankia and four other Spanish banks to junk status because of uncertainty over restructuring and recapitalization plans. Trading in Bankia shares were suspended Friday while its board determined how much new aid was needed. The bank's shares have been whipped about violently in recent weeks on fears it could succumb to the massive losses it has built up in in bad loans in the country's collapsed real estate sector. Follow our comprehensive Euro Crisis spotlight coverage Bankia requested the suspension of its shares from the Madrid stock ahead of the board meeting to decide on a recapitalisation plan, the bank said in a statement. Bankia's shares plummeted 7.43 per cent on Thursday to close at $1.96, taking total losses to more than 58 per cent since their listing in July 2011. On the same day the Spanish government had announced a$11bn bailout for the troubled bank. Bankia was part-nationalised two weeks ago because of its problems with bad property debt. Any extra government money would be on top of the $5.6bn in state loans that the government converted into shares in the group in the part-nationalisation process. 'Viability plan' Jane Foley, senior foreign exchange strategist for the Dutch bank Rabobank, told Al Jazeera: "I think that the Spanish banking sector is a very key part of the whole eurozone crisis. And the fear is if the bank isn’t saved, there could be a wider run on those deposits." "We don’t think the Spanish government has the money," she said. "This is why the market is concluding that it is very possible at some point of time, the Spanish government may have to concede it needs outside help. "It would be looking to its eurozone allies and bailout funds to help prop-up those Spanish banks." Luis de Guindos, the Spanish economy minister, told parliament on Wednesday that the government would provide any capital needed to turn the bank around. He said the "viability plan" to be drawn up by the board Friday must specify the capital required to fully meet tougher new banking rules introduced by government reforms in February and May. There have been four attempts by Spanish governments to shore up the banking system since the global banking crisis of 2008. Bankia was created in 2010 from the merger of seven struggling regional savings banks.