Tuesday, June 1, 2010

Spanish Bank Asks for $3 Billion from Rescue Fund

Another leak in the dike.

Spain's second-biggest savings bank Caja Madrid has asked for up to 3 billion euros ($3.7 billion) from a government rescue fund set up to promote mergers among the country's network of unlisted savings banks, a source close to the company said on Tuesday, Reuters reports.

The government has set a June 30 deadline to tap money from the Fund for Orderly Bank Restructuring (FROB).

Increased demand for support could result in needs for further funding by the FROB, leading to the fund seeking capital markets support in the short term, Barclays Capital said in a recent note.

Fitch Ratings on Tuesday downgraded FROB debt to AA+ from AAA following its similar downgrade of Spanish government debt on Friday.

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