If you thought things were tight in Greece, they certainly don’t look too much better in Spain. In the first three months of this year, nearly €100 billion in capital has left the country. Put differently: about 10% of the country’s GDP.

The European Central Bank’s (ECB) president, Mario Draghi, said national supervisors had repeatedly underestimated the amount a rescue would cost. He continued that Spain’s handling of the problems at Bankia, its third largest lender, had not been satisfactory to say the least.

Raj Badiani, an economist at HIS Global Insight, told the Financial Times:

My concern is that we haven’t yet seen the most recent numbers, which could be far worse. We are seeing a perfect storm.

Mr Draghi’s and Mr Badiani’s harsh words follow that Spain last week announced it would inject an additional €19 billion of capital into Bankia.

Madrid’s biggest bank nationalisation will take the total amount of state aid pumped into Bankia to €23,5 billion, but in February, Spain said no more public money would be needed for its banks.

Policymakers, and Draghi himself, say the lesson from this is that there should now be a centralised EU regulator for the banks that presented a risk to the entire eurozone financial system. National regulators are obviously not working.

One European official explained:

The main argument against the ESM taking direct bank stakes is that currently it is up to national authorities to decide on the financing needs of their own troubled institutions. If a European entity is going to inject money into a bank it needs to have confidence in the numbers.

UK officials will likely turn their noses up at the idea after successfully rescuing banks like the Royal Bank of Scotland, one of the world’s largest.

[Source: Financial Times via CNBC]