Caja Madrid To Ask For €3 Billion In Government Support
Earlier we reported that Caja Madrid was put on downgrade review by S&P, following Friday's puke fest on all things Spanish by Fitch. The rating agencies may have gotten it right for once: MarketWatch reports that according to a report, Caja Madrid "will tap the government for €3 billion in rescue funds." That CajaSur "New Century" domino, as we predicted, is starting to really set in.
More from MarketWatch on the collapsing Spanish depository and banking sector:
Up until a couple of weeks ago, the term "caja", which literally means box or chest, was not such a familiar term with global investors, but many are now getting a crash course as news is rapidly spilling out from the sector.
Spain has 45 savings banks and an increasing number are now in merger talks -- ailing from the collapse of the housing market -- amid some estimates that the country has 30% more bank branches than it needs.
Pressure to merge and restructure has come from the International Monetary Fund and the Spanish government.
The government has set up a Fund for Orderly Bank Restructuring, or FROB, to speed along this process, and given the savings banks until June 30 to ask for the money they need.
The fund has a total value of €99 billion and is funded with €9 billion of capital and up to €90 billion of government-backed debt.
Look for any temporary strength in the US stock market better known as the EURJPY cross to fizzle as fresh concerns about Spain, and Italy, whose CDS hit a record level earlier, once again become dominant.