Spain’s state bank bailout fund will transfer between €4 billion and €5 billion into Bankia to boost the nationalised lender’s capital levels to more than regulatory minimums after it suffered heavy losses in the first half.

Announcement of the transfer – which formalises a decision made on Friday to provide Bankia with a bridging loan in advance of European rescue money – was due last night.

The board of the Frob, Spain’s state bank rescue fund, met yesterday to decide the amount that would be provided for Bankia, which two officials said would be between €4 billion and €5 billion to raise its core capital level to more than 8 per cent, as specified by the Bank of Spain.

Bankia on Friday announced a €4.4 billion loss in the first half after being forced to make provision of €2.7 billion against bad property loans.

Bankia – a merger of seven savings banks listed on the Madrid stock market last summer – was forced to request a €19.5 billion state rescue in May. – Copyright The Financial Times Limited 2012