Spain is planning a state bail-out of Bankia, the country’s third biggest bank by assets, in a move likely to involve the injection of billions of euros of public money into the troubled lender, the Financial Times reported. In an abrupt reversal of policy, the Spanish government, which had previously insisted that no additional state money would be needed to clean up the country’s banking sector, confirmed that an intervention was being prepared.

Marta Fernández should have been celebrating. After looking for work for months, she found a position in a media company in Madrid. But her new job, working full time for €300 a month, will barely cover her rent. She is one of the luckier Spaniards aged 25 and under, of whom more than half are languishing outside of work or education as the country suffers one of the highest levels of youth unemployment in the EU, the Financial Times reported. The abrupt end of Spain’s construction boom left thousands of young labourers without work.

Spanish oil heavyweight Repsol YPF SA has lost nearly one-fifth of its valuation after Argentina's move to seize control of YPF SA sliced off a huge chunk of the company's production and earnings. Yet, two weeks after the Argentine bombshell, some investors and analysts are starting to devise a potential upside scenario for the battered Spanish company, The Wall Street Journal reported.

Spain has joined seven other euro-zone economies in recession, according to data released Monday, providing further evidence that austerity policies are failing to regenerate confidence in the region's economies and heightening pressure on the government as the country braces for a week of antiausterity protests, The Wall Street Journal reported. Almost every piece of new economic data in recent weeks has reinforced the impression that large swaths of the European economy are contracting.

Spain’s government and its banks are discussing a new scheme to segregate problematic property loans into one or more asset management companies to relieve the burden on struggling lenders, according to officials and bankers, the Financial Times reported. The “bad bank” scheme is the latest attempt by the centre-right government of Mariano Rajoy, prime minister, to avoid an international rescue programme of the sort required by Greece, Ireland and Portugal.

Spanish officials moved to shore up confidence in the ailing local economy after new data showed unemployment at an 18-year high, after credit-ratings firm Standard & Poor's slapped Spanish government debt with a two-notch downgrade, The Wall Street Journal reported. Spain's statistics bureau Friday said the country's jobless rate rose to 24.4% in the first quarter, from 22.9% in the fourth quarter of last year, inching toward its highest level on record. More than half of workers under 25 years old were without jobs.

A YPF bond due in July next year is likely to default, and while Repsol YPF SA should escape a similar fate, this prospect could be yet another headache for the Spanish company after YPF's operations were seized by Argentina's government last week. Analysts expect that YPF's nationalization will almost certainly lead to a default on its bonds. Argentina's proposal to take over 51% of YPF would cut Repsol' stake to just 6% from 57% currently. Repsol, which denounced the takeover, has vowed to take the dispute to court.

Spain in recent days has taken center stage in the euro crisis, Spiegel Online reported. The country's banks are threatened with collapse and the government in Madrid has not been successful in efforts to get the national budget under control. Will the country be forced to request aid from the euro bailout fund? Spain's banks are widely regarded as time bombs, with portfolios of volatile loans on their balance sheets that could explode at any time. The country is sliding deeper into recession and international financial investors are slowly but surely withdrawing.

Spanish banks may need to set aside more money to cover exposure to a bust property market because they still have to recognise billions of euros in loans to non-viable companies, said a report by Spanish property consultancy RR de Acuna. Spain has ordered its battered banking sector to reinforce balance sheets as a correction in the housing market continues and the central bank forecasts lenders will need some 53.8 billion euros ($70.7 billion) to cushion against bad debt. But Thursday's report said that may not be enough. "Banks are not recognising all of their risk.

Spain’s surging bad loans are spurring doubt on whether the government can persuade investors that it can clean up the country’s banks without further damaging public finances, Bloomberg reported. Non-performing loans as a proportion of total lending jumped to 7.91 percent in January, the highest level since 1994, from less than 1 percent in 2007, according to Bank of Spain data. The regulator is set to publish data for February today.