Bankia, the lender at the heart of Spain’s financial crisis, yesterday revealed a record loss of €19.2 billion for 2012, but claimed it was now in a “solid position” and eyeing a return to profitability.
The bank’s loss is the highest in the country’s corporate history, and is primarily the result of €26.9 billion in provisions that Bankia had to book last year to cover losses on its real estate and loan portfolio.
Regional merger
Created through a merger of seven regional savings banks, or cajas, in 2011, the group was hit harder than any other lender by Spain’s property bust. Along with a number of smaller cajas, Bankia was nationalised last year after revealing a huge capital shortfall that forced Madrid to negotiate a €100 billion banking bailout with the European Union.
Bankia and its former management have since emerged as prime targets of popular anger and frustration – and have drawn particular fury from the 350,000 retail investors who bought into its heavily marketed initial listing two years ago.
The bank was floated at a price of €3.75 a share. Yesterday, Bankia shares were trading at about €0.30.
Spain’s Fund for Orderly Bank Restructuring is currently in the process of calculating the exact amount of money it will have to inject into Bankia to complete the restructuring process. Officials have made clear that the resulting dilution will wipe out almost the entire value of Bankia shares.
José Ignacio Goirigolzarri, who was brought in as Bankia chief executive last year to steer the group out of the crisis, insisted that the bank had a future despite its recent troubles.
‘Profitable entity’
“We begin 2013 in a strong position: a healthy balance sheet, good levels of solvency and excellent liquidity position,” he said in a statement. “Our challenge now is to turn Bankia into a profitable entity that will allow us to pay back to society the support we have received.”
Bankia said its bad loan ratio stood at 13 per cent in the fourth quarter – up from 7.6 per cent the year before.
– Copyright The Financial Times Limited 2013
