The head of Spanish banking group Bankia, Rodrigo de Rato, unexpectedly stepped down on Monday amid fresh announcements by the government in Madrid to reform the financial system in the country.

Rato, who was a former managing director of the International Monetary Fund (IMF) and also served as economics minister from 1996 to 2004, said in a communiqué on Monday that his resignation was in the best interest of Bankia. He announced that he'd be succeeded by former BVVA Bank Chief Executive Jose Ignacio Goirigolzarri.

Bankia has been considered the bank most exposed to the meltdown of Spain's decade-long property boom, which left the nation's lenders with toxic assets worth about 180 billion euros ($230 billion). It has already received billions of euros in state loans. In 2011, Bankia still had doubtful real estate-related assets totaling 31.8 billion euros.

Government interference

Rodrigo de Rato had until the very end defended the solvency of Bankia, saying it would be able to wriggle out of its current plight on its own.

Spanish Prime Minister Mariano Rajoy on Monday conceded the government might use taxpayers' money to rescue the country's ailing banks, if only as a last resort. A reform of the financial system is to be adopted by the cabinet on Friday, May 11.

The draft bill is expected to include the creation of liquidation companies to rid banks of toxic assets which could be evaluated and sold off. Rajoy said the assets would be sold at real market prices, even if it were at a loss.

hg/gsw (dpa, AFP)