MADRID, May 12 (UPI) -- The Spanish government, with the economy slipping into recession, said its banks need to raise $39 billion to protect Spain's financial system.
In response to the announcement, the stock market in Madrid dropped 3 percent. The government had already announced earlier in the week it would take control of 45 percent of Bankia.
The British Broadcasting Corp. reported Saturday the European Commission said raising that much capital "would make it harder for individuals and businesses to borrow money, which would constrain the economy."
The commission recently projected Spain's economy would shrink by 1.8 percent in 2012 and by 0.3 percent in 2013.
Spain, which has the highest unemployment rate in Europe, was hit hard by the financial downturn, as it had just undergone a building boom when the downturn struck.
At this point, the Bank of Spain estimates 60 percent of the property assets held by Spanish banks – assets worth $237 billion – are in distress, representing either seized property or loans going under, the BBC said.
|Additional Business News Stories|
ERBIL, Iraq, June 19 (UPI) --Iraq's Kurds have consolidated their growing energy sector with Chevron Corp. securing a third exploration block in the semiautonomous northern region that increasingly operates as a de facto independent state and France's Total buying a majority stake in another.
RIYADH, Saudi Arabia, June 19 (UPI) --Britain's BAE Systems, Europe's biggest defense company, reportedly expects to wrap up a price deal with Saudi Arabia for 72 Eurofighter Typhoon combat jets after two years of tortuous negotiations.