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Fondo de Reestructuración Ordenada Bancaria

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Title: Fondo de Reestructuración Ordenada Bancaria  
Author: World Heritage Encyclopedia
Language: English
Subject: NCG Banco, Banking in Spain, José Ignacio Goirigolzarri, European debt crisis, European Stability Mechanism
Collection: 2009 Establishments in Spain, Banking in Spain, Banks of Spain, Government of Spain
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Fondo de Reestructuración Ordenada Bancaria

The Fondo de reestructuración ordenada bancaria (FROB), in English known as Fund for Orderly Bank Restructuring (FOBR), is a banking bailout and reconstruction program initiated by the Spanish government in June 2009.[1] FROB, translated as the "Fund For Orderly Bank Restructuring", presides over the mergers and acquisitions of Spain's failing savings banks. FROB was funded with €99 billion, which it has used to incentivize the nations large savings banks (or Cajas) to participate in large joint "virtual" mergers in an effort to stave off systematic financial instability.[2]

In 2009, European leaders discussed whether European Union rescue program money can be paid directly to Spain’s bank rescue fund FROB to help Spain solve its banking crisis without seeking a full bailout, Bloomberg' Sueddeutsche Zeitung reported. In return for the cash, Spain would have to promise to solve its banking problems with measures that may include closing or merging financial institutions. Spain would not have to promise any major austerity or economic reforms in return for the help, the newspaper said.

On June 9, 2012, the Spanish economy minister Luis de Guindos announced that Spain would request a loan of up to 100 billion euro for FROB, which would be used to recapitalise Spanish banks. The money would be provided by the European Financial Stability Facility or the European Stability Mechanism.[3]

Bankia bailout

In 2009, a proposal was raised for Spain’s bank bailout fund to convert its 4.5 billion euros ($5.8 billion) of preferred shares in Bankia’s parent, Banco Financiero y de Ahorros, into voting shares, according the Economy Ministry. That would give it a controlling stake of 45 percent in Bankia, the ministry said, adding the government will provide the capital that’s “strictly necessary” to clean up the lender. [4]

On May 25, 2012, Bankia announced that it will ask for an injection of 19 billion euros from the FROB.[5]

References

  1. ^ http://seekingalpha.com/article/183698-spain-gets-frob-bed-off-by-the-eu-commission
  2. ^ "Unholy mess". The Economist. 2010-05-29. 
  3. ^ "Spain Seeks EU’s Fourth Bailout With $125 Billion Request". Bloomberg. 2012-06-09. 
  4. ^ http://www.businessweek.com/news/2012-05-09/spain-takes-over-bankia-readies-second-bailout-after-rato-quits
  5. ^ http://www.bankia.com/page/id-2-1304-0-99634-428557-99633-0.go

External links

  • Official website
  • FROB FAQ
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