Brussels urges Spain to clarify its plans for Bankia bailout

SHARES in bankrupt Spanish lender Bankia were suspended from trading yesterday as the European Commission told Madrid that it must end uncertainty over its bailout plans.

EU commissioner Amadeu Altafaj said: “What we need first of all is for the Spanish government to tell us its restructuring plans for Bankia, what options it is considering... The sooner uncertainties are removed the better.”

Spain has caused confusion by first floating a plan to recapitalise Bankia by handing over €19bn (£15.2bn) of government bonds and then getting the lender to swap them for cash at the European Central Bank.

That plan was reportedly rejected by the ECB, but with Spain’s borrowing costs soaring, it is not clear if the government is prepared to issue new debt to rescue its banks.

Bankia’s share price has more than halved since the start of May.