ECB Denies Report on Bankia Recapitalization

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The European Central Bank (ECB) moved Wednesday to assuage fears that it stood ready to block Spain's recapitalization of troubled lender Bankia, by stressing it was not consulted over the plan.

"Contrary to media reports published today [Wednesday], the European Central Bank (ECB) has not been consulted and has not expressed a position on plans by the Spanish authorities to recapitalise a major Spanish bank. The ECB stands ready to give advice on the development of such plans," the central bank said in a brief statement released on Twitter.

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Earlier Wednesday, Spanish Finance Minister Luis de Guindos also denied reports in the Financial Times (FT) that said the ECB prohibited plans to recapitalize Bankia.

De Guindos reportedly said in a congressional session that the markets should listen to the Spanish government over the FT. The newspaper reported Tuesday that the ECB rejected Spain's plan to tap the central bank's lending facility to pump €19 billion ($24 billion) in sovereign funds into Bankia's parent company.

Spanish bond markets were roiled by the prospect of the ECB pouring cold water on the bank rescue plan.

Yields on Spain's 10-year government bond rose 26 basis points to 6.722 percent Wednesday, nearing the November 2011 high of around 6.8 percent.