Spain banks may get rescue cash early

Bankia and other bailed-out Spanish lenders may receive their European rescue funds sooner than the September date previously planned, a government source said Wednesday. Spain is a focus of attention as economists warn that it may need a full international bailout to help it pay its debts, on top of the up to 100 billion euros ($123 billion) in EU rescue loans agreed for its banks. "We are working on the demand for funds for Bankia. The deadlines are open. There is an installment of 30 billion euros and a possibility of an earlier injection," the source in the economy ministry told AFP. "We are working on that for Bankia and the rest of the nationalised banks" -- CatalunyaCaixa, Novagalicia and Banco de Valencia, the source added. Spain's government had planned to announce after the results of an audit, due in September, how much the four banks need to get from a 30-billion-euro ($37 billion) first installment of eurozone loans. That is part of the credit line of up to 100 billion euros agreed last month by the euro countries to stabilise Spain's banks, which are struggling with mountains of bad loans from a property bubble that burst in 2008. Spanish daily El Pais, citing ministry sources, reported Wednesday that the rescue funds for Bankia were being finalised and would be transferred to it within days. The money is due to be transferred via a Spanish government bank restructuring fund. Bankia's share price shot up by more than 10 percent on the Madrid stock exchange Wednesday after the reports, but this was only a fraction of its losses since it listed on the market in July 2011. Bankia was formed in 2010 by the merger of several regional savings banks as part of a costly restructuring of a banking sector stricken by the financial crisis. In May this year it turned to the government for a 23.5 billion euro bailout which drove Spain to seek the eurozone rescue funds for its finance sector. In Brussels, European Commission spokesman Olivier Bailly told reporters on Wednesday that Spain had not yet formally submitted a request to activate the emergency aid programme for its banks. "We can take a decision any day or night," Bailly said. "For the moment, the obstacle is that we have not received a request." Spanish Prime Minister Mariano Rajoy has announced a series of unpopular measures including pay cuts and tax hikes in his efforts to lower Spain's deficit. His government on Friday said it planned savings of 102 billion euros ($125 billion) by 2014. An EU source said Tuesday Spain was reluctant to seek a broader bailout if it meant accepting more tough conditions on top of these efforts. The source said that Rajoy is waiting for a European Commission assessment of the new 2013-2014 spending targets, the results of which are expected by mid-September at the earliest.