Bankia Bailout Costs Rise Again, Now At €19 Billion, €4 Billion Increase Overnight

Tyler Durden's picture

Well under 24 hours ago we wrote, "As Bankia Bailout Costs Grow Exponentially, Is A Stealth Bank Run Taking Place" in which among other things, we listed the chronology of the Bankia bailout. To wit: "Note the following sequence of events, bolded numbers, and dates:

  • Bank Of Spain Formally Nationalizes Bankia, Says Insolvent Bank Is "Solvent", Adds There Is No Cause For Concern, Zero Hedge, May 9
  • Spain is taking over Bankia by converting its 4.5 billion euros of preferred shares in the group’s parent company into ordinary shares, BusinessWeek, May 21
  • Spain said on Wednesday its rescue of problem lender Bankia would cost at least 9 billion euros ($11 billion), as the government tries to clean up a banking system that threatens  to drag the country deeper into the euro zone crisis, Reuters, May 23   
  • Bankia SA will have to ask the Spanish government for more than 15 billion euros as part of its effort to restore its financial health, state-owned news agency EFE reported Thursday, citing financial sources, Dow Jones, May 24

Hopefully we aren't the only ones to notice how the bailout cost has oddly doubled almost on a daily basis."  We concluded: "It is a virtual certainty that in the next few days we will see total Bankia "bailout costs" rise more and more, until the truth becomes self-evident to even the most financially unsophisticated soon to be ex-depositor. Sadly, we are also fairly confident this is not limited to Bankia as more of the harebrained Cajas consolidation schemes from 2010 blow up one by one."

Sure enough, courtesy of Spanish daily Europa Press:

Or translated:


What does this mean? Again, from yesterday: "Sadly, what the Spanish government and the Bank of Spain have demonstrated, is that despite all the rhetoric, capital flight has not only stopped, it is accelerating."

In other words, since the bailout total yesterday, which was €15 billion, through today, another €4 billion in cash has left the bank.

Yes: you won't hear the words "Bank Run" uttered in the media, as that would imply panic. Unfortunately, that is the only explanation for a €4 billion capital (i.e. cash) deficiency overnight.

Things in Spain are getting worse by the minute, which sadly is becoming more predictable by the day.

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Kreditanstalt's picture

OT, but has anyone noticed?  Gold seems to be flat or rising today WITH the dollar...

idea_hamster's picture

I thought that the tactic was 

(1) Declare a crisis

(2) Ask for €15 Billion bailout

(3) Get the €15 Billion

(4) THEN tell everyone you need another €4 Billion lest the Lord's fimament be cleaved in twain with cats and dogs sleeping together.

These Spaniards can't do anything right....

falak pema's picture

the whole financial world is in denial.

walküre's picture

the whole world is in denial

... aside from a few like us on this site

until a shot gets fired somewhere, then all hell breaks loose.

EuroSovietSerf's picture

Exactly, the whole world is in denial of just how unsustainable our financial-economic system is. A system that is based on assumptions like limitless natural resources and requires perpetual population growth AND perpetually increasing debt (to match the population increase, ignoring the natural resources problem). Infinite growth is a requirement and 99% of the world refuses to acknowledge that infinite growth is impossible on a finite planet with finite resources.

If everyone on Earth lived like the average of 'the west' it would require some 3-5 planets in terms of natural resources, depending on which country you take as a template. Does the rest of the world want to continue subsidizing our wealth by remaining poor? I think not. In fact, they want to be like us and who can blame them. We have no moral authority to tell them not to. And even if the financial system was sustainable (which I believe it isn't), this resource problem isn't.

barliman's picture


Vooooopa Vooooopa Vooooopa

Bam Bam Bam Bam

(1) Declare a crisis

(2) Ask for a bailout of X billion euros

(3) Get the bailout of X billion euros

(4) THEN tell everyone you need another Y billion euros lest the Lord's fimament be cleaved in twain with cats and dogs sleeping together.

There, made it generic for you. You might name this "Greek Sex Bailout Process" ... purely in honor of the country which has perfected it over the last Z years.


Sam Clemons's picture

As the financial media would say.  "Unexpectedly, Bankia Bailout Costs Rise Again.."


Read: - The Bubble on the Potomac

The Monkey's picture

After a great and long run, starting at over 4.6%, I just closed my 30 year US treasury positions.  Regardless of the news, I bought these suckers when Bill Gross was "shorting" them.  Now that he's on his pulpit selling treasuries makes me a bit suspicious that something else will happen.  If the Europeans miraculously kick the can again, rates go up.  If we get a big capitulation, rates will likely go down, but then the flows will reverse almost overnight as money will flow into risk.

Sidelined with cash for the next couple months.


The Monkey's picture

Think about the long bond for a moment.  The Fed has little inventory of short term notes to perform another duration swap.  At some point, they have to go back to dillutive open market purchases.  Add capitulation to a dillutive QE and you could see the safest sovereigns really tank.  If long rates do compress as they did in 2008, the obvious trade will be to short treasuries (TBT).

The Monkey's picture

My prediction.  Within 12 months, long term rates will be substantially higher than they are now.  There has to be a ton of money waiting for a panic "blow off top" in treasuries to short.  Check out the charts in 2008.  You had to be extremely nimble to sell (or short) at the top.

Yikes's picture

Japan long bond would seem to suggest otherwise.  Never underestimate the Government's ability to loot the common folk. 

QE3 will happen before UST's yield goes up.

Ned Zeppelin's picture

Agreed. The rates will not be allowed to  go up, and this is why Bernanke is keeping his powder dry (in terms of explicit QE) for now.   Print they will, but they are waiting until it has to be done.

The Monkey's picture

True.  Gary Shilling and Lacy Hunt are my favorite strategists.  Japan though did not light up the board with massive QE to fight deflation and it's debt is held internally.  Even though Bernanke has been on pause, I bet that he will load the boat again with a mix of short-term (for a later swap) and agency RMBS (to help anchor long rates).  If we learned anything from 2008, it's that rates on the other side blast higher given the "fight deflation at any price" policy.  Unless they accept deflation, which they won't, then rates will go up.

The Monkey's picture

I think Pimco / others must be selling long treasuries on expectations of central bank action.  Treasuries stopped their inverse correlation with stocks this past week.  At first I thought it was the auctions or consolidation, but it has persisted and has given me the willies.

youngman's picture

I used to think like you awhile ago....I too thought interest rates should go up...just on the risk level....but Noooooo...there is a new player in the game...the central banks....and they will NOT let interest rates go plan on the print...both above the table..and below...its really a crooked game out there now...

The Monkey's picture

Check out the 30 year treasury yield in 2008.  It bottomed months before the stock market capitulated.  I agree that rates will stay low, what I'm saying is that we are either near the cycle low in rates, or will get a panic into treasuries on a spike.  Since we don't know which will happen, the low risk strategy is to stay clear.  If treasuries have a panic spike, short them at 2X leverage via TBT.  You get to know the outcome before putting your capital at risk.

stocktivity's picture

I wonder who will hold over a 3 day weekend? We could see a pretty good selloff this afternoon. Who knows what this mess will look like by Tuesday at 9:30 am when we open again in the US.

John_Coltrane's picture

Fortunately, the pain is mainly in the plain.

slaughterer's picture

Just give Bankia EU 70billion and hope they go away.  

Zero Govt's picture

haven't they already had 2 bailouts/handouts from Count Draghiliar??

a few €million out is bad enough but €4 billion overnight????

where do they find these bankers and accountants, the lunatic asylum?

blunderdog's picture

You do understand gold was never really a "risk-on" asset, right?

Kreditanstalt's picture

Well, that's what the mainstream idiots think...kind of Pavlovian for them...

Diet Coke and Floozies's picture

risk on with 200:1 leverage! :P

Kreditanstalt's picture

If so, this might indicate that the funds/hedgies/insurers/banks who are so very busy little beavers dumping their gold (along with their garbage) and selling their Euros for US dollars are finding the going a little rich.  The dollar index is pretty rich now.  Are they experienceing the rock of desperation to sell and the hard place of high price for dollars?  Or are they running out of collateral altogether?

Anyway, let's hope it continues...

writingsonthewall's picture for a for a peseta...

Zero Govt's picture

..when you're in a hole/shit may as well keep digging

it's a key policy initiative from Davos

youngman's picture

Its more like get... while the getting is good....if they keep giving them billions....take it....your salary and bonuses for the next ten years can be prepaid I bet....

Dr. Engali's picture

They are all insolvent...the banks, the government, and the people.

Zero Govt's picture

..and that's just the good news, just wait til you hear the bad stuff !

Kreditanstalt's picture

" won't hear the words "Bank Run" uttered in the media, as that would imply panic. Unfortunately, that is the only explanation for a €4 billion capital (i.e. cash) deficiency overnight."

Wonderful!  Three cheers!  Now we'll see who has been swimming naked, as they say...

OpenEyes's picture

Things are moving quickly now.  

Paper CRUSHer's picture

Right,whats more surprising is the word temporary is no longer being used by the media.

Since we're all too familiar with the term....,temporary bailout,temporary rate cut, temporary cut collateral requirements etc,that it seems strange we didn't get a good ol' fashion temporary bank run this time round.

walküre's picture

They can't afford to openly discuss it. It's like the One who shall not be named.

Lord Voldemor = BANK RUN

Just the mere mention of the phenomenon at this stage will break the camel's back. Assurances, words of guarantees and so on matter little when the trust is gone.

youngman's picture

Its going to be a long would not suprise if the NYSE opens on Monday for the crisis.......I expect Greece to leave this weekend...just a hunch....

EuroSovietSerf's picture

I'm betting you're right, this is a bank run... a relatively slow one. Maybe 'bank walk' is a good term for it.

jus_lite_reading's picture

>>"Yes: you won't hear the words "Bank Run" uttered in the media, as that would imply panic. "<<

Just like they won't tell you how much radiation is really leaking or has already leaked from Fukushima until 20 years later and millions are dead from thyroid cancer!! A dead man can't riot!!

The handwriting is on the F^*ING WALL!!!

RobotTrader's picture

Hurry up and let Greece exit and Bankia nationalized.

Let's get it over with.

When those two items are out of the way, then the Dow will be up 500 points and the Euro will stage an epic short squeeze.

With the 10-yr. yield at 1.74% and anything under 5-years practically free in the U.S., Japan, and Germany, the "Animal Spirits" should be sufficient to send global stocks to new highs by the end of the year.

slaughterer's picture

The Robot is Back!  And More Bullish than Ever!

SheepDog-One's picture

Jesus Christ....YOURE back again? FUCK! Where ya been, down at county lockup?

tocointhephrase's picture

Either way, Gold will match the Dow 1-1

Robot Trader&#039;s brother's picture

My brother is off his meds and back on the computer.

Apologies all around.

Click his red arrow and move on.

falak pema's picture

You won't ever admit to getting it as you are paid to posture otherwise. Its all connected. If the leaky barrel of banksta ponzi is dribbling in Greece and Spain today, it could be doing the same in LA or NJ if the FED were not reserve banker. But that is a losing game they now play, as they keep upping the ante of their own debt, without changing the trade flux, making it inevitable that the USD gets junked really bad, especially once the Euro has been junked as first sacrificial lamb. Euro pays today as the global ship is leaking and will continue to do so. The leak will go mega big like a burst artery if ever club med goes west. That makes the core open to bleed as the peripherals have no more funny money to puke out. They can then go back to real economia, on the side lines. And let core first world collapse in the funny money casino play which is self devouring, like SHiva the God of destruction. Read your classics and learn what Karma has in store for the swindlers. 

Hulk's picture

10 yr yield is artificial, not market driven. A joke.

Defying gravity has been expensive and energy intensive. The gas tank is about empty and nature is about to re-assert herself

Got Gold ???