Spain’s plan to recapitalize Bankia has been rejected by the ECB, according to the FT.
Madrid had floated the unorthodox idea over the weekend of recapitalising Bankia by injecting €19bn of sovereign bonds into its parent company, which could then be swapped for cash at the ECB’s three-month refinancing window, avoiding the need to raise the money on bond markets.
That’s a kick in the balls that Spain doesn’t need right now.
