2012.05.28 13:58:52 Spain's PM: Bankia Move Part Of Process To Strengthen Banks

MADRID (Dow Jones)--The recent takeover of Bankia SA (BKIA.MC) by the Spanish government is only part of a wider process to strengthen Spain's financial sector, similar to those undertaken by other countries in recent years, Prime Minister Mariano Rajoy said Monday. Speaking at a press conference, his first following a EUR19 billion government bailout was unveiled late Friday, Rajoy said Spain is not seeking an outside rescue package for the troubled sector. He added that financial reforms should help the banks get rid of troubled property assets, making it easier to revive the real estate sector and contribute to the wider economy. Rajoy added that he doesn't believe that Bankia's woes have contributed to the latest surge in the risk premia requested by investors to hold Spanish debt, rather than German debt which widely seen as safer. Bankia's shares tumbled 27% when they resumed trade Monday after they were suspended Friday, and were trading 13% lower at 1136 GMT. The massive injection of taxpayer money into Bankia will effectively nationalize the country's third-largest bank by assets, and is a dramatic escalation of the efforts by the Spanish authorities to shore up confidence in its financial sector. -By David Roman, Dow Jones Newswires, +34 91 395 8127, david.roman@dowjones.com @dromanber (END) Dow Jones Newswires May 28, 2012 07:58 ET (11:58 GMT)