MADRID – The Spanish government is negotiating with Brussels to limit losses to holders of preference shares under the 100 million-bailout approved for the Spanish financial sector, said the Financial Times on Wednesday, citing sources with first-hand knowledge of the conversations.
According to the British newspaper, the Spanish government wants to return the full amount of the investments made by depositors, the vast majority of their customers which now need to be rescued.
But payment would be made in installments, with an initial and subsequent expenditure set to complete 100% of the initial investment.
According to the consumer association Adicae, Spanish banking has attracted about 40 million Euros in investments in recent years, with products such as preference shares or convertible bonds.
Brussels, in the memorandum of understanding signed by the Spanish Government in July, demanded that preferred shareholders participate in the cleanup of those banks that receive public funds.
On July 17, the new Governor of the Bank of Spain, Luis Maria Linde, said he hoped that the government finds satisfactory solutions to the problem of preference within the framework set by Brussels.
On Wednesday, a spokeswoman for the Ministry of Economy would only say that there is regular communication between Brussels and Madrid on the issue of bank rescue, but would not comment on specific aspects of those conversations.
The Economy Ministry expects to release, on August 24, the legal framework for financial sector restructuring which contemplates the establishment of a committee to take over toxic assets.
Bankia, who asked for 19 million Euros to be rescued, was also one of the most active institutions in placing preferred shares among its clients, with an outstanding balance of 3.1 million Euros.
In recent weeks, shares of Bankia soared and tripled in value, pending the injection of public funds.
Given the soaring shares, the Bank Restructuring Fund (FROB) reiterated Thursday that Bankia shareholders should be involved in covering the cost of cleaning up the organization, thereby causing a another sharp decline in stock market shares of Bankia.