Bankia

Bankia S.A.

Type	Sociedad Anónima
Traded as	BMAD: BKIA
Industry	Financial services
Founded	3 December 2010 (2010-12-03)
Headquarters	Madrid and Valencia, Spain
Area served	Spain
Key people	José Ignacio Goirigolzarri (Executive Chairman) José Sevilla (CEO)
Products	Retail banking, corporate banking, investment banking, private banking, asset management, finance and insurance
Revenue	€ 3.806 billion (2015)
Profit	€ 1.040 billion (2015)
Total assets	€ 206.970 billion (2015)
Owner	Spanish Government (64%)
Number of employees	13,569 (2015)
Website	www.bankia.com

Bankia's operational headquarters in Puerta de Europa Tower in Madrid

Bankia (Spanish pronunciation: [ˈbaŋkja]) is a Spanish bank that was formed in December 2010, consolidating the operations of seven regional savings banks.^[1] As of 2012, Bankia is the fourth largest bank of Spain with 12 million customers.^[2][3] Formerly a private bank, it was partially nationalized by the government of Spain in May 2012 due to the near collapse of the institution.^[4][5] The bank is organised into six business areas: Retail Banking, Business Banking, Private Banking, Asset Management and Bancassurance, Capital Markets and Investees.^[6] Bankia is listed on the Bolsa de Madrid and is a constituent of the IBEX 35.

History

Formation and IPO

Bankia was formed on 3 December 2010 as a result of the union of seven Spanish financial institutions, with major presence in their areas of influence. The merger of the seven savings banks, known as 'cold fusion', took only four months, with the integration contract being signed on 30 July 2010.^[7] Caja Madrid, which is itself owned by the government of the Community of Madrid, holds controlling interest. The distribution of shares was as follows:

• 52.06% Caja Madrid
• 37.70% Bancaja
• 2.45% La Caja de Canarias
• 2.33% Caja de Ávila
• 2.11% Caixa Laietana
• 2.01% Caja Segovia
• 1.34% Caja Rioja

After the merger, Bankia was initially owned by a holding company Banco Financiero y de Ahorros (BFA), and the seven banks controlled BFA. The most toxic assets from the banks were transferred to BFA, which obtained 4.5 billion euros from the Spanish government rescue fund FROB in exchange for preference shares with an annual interest rate of 7.75%, maturing in 2015. In 2011 Bankia offered shares to the public in an IPO.^[8][9] Investment bankers found little interest in the IPO among international institutional investors. Strategy shifted to selling the stock domestically with 98% of the initial 3.1 billion euros raised by domestic sales of shares.^[10]

Shares of Bankia began trading on the Bolsa de Madrid on 20 July 2011, under the symbol BKIA, and was listed in the IBEX 35.

Insolvency and state bailout

In 2012, Bankia was the third largest lender in Spain, but the largest holder of real estate assets at 38 billion euros.^[9] On 7 May 2012, Rodrigo Rato stepped down as chairman of Bankia SA in order to clear the way for a rescue plan that the Spanish government hoped would persuade international investors of the country's financial stability. José Ignacio Goirigolzarri became the new president. Concerns about the value of Bankia's assets, and the potential for further losses in the future prompted speculation that the Spanish government would inject up to 10 billion EUR of new capital into the troubled bank.^[11]

On 10 May, the Spanish government said it would convert its preference shares in BFA into voting shares, giving it a controlling stake of 45% in Bankia.^[9] On 25 May, trading in the shares was suspended at Bankia's request.^[12]

On 25 May, it was reported that Bankia SA had negotiated a further 19 billion euro (US$23.8 billion) bailout, marking another rise in the cost of a drawn-out rescue.^[13] The government had already spent 4.5 billion euros to prop up Bankia, and the entire rescue was then seen totalling some 20 billion euros.^[14] The New York Times described the increasing bailout as making Spain one of the new focal points of the European sovereign-debt crisis.^[15] Bankia also revised its earnings statement for 2011, stating that instead of a profit of 309 million euros, it had in fact lost 4.3 billion euros before taxes and asked for 1.4 billion fiscal credit to reduce its loss.^[12][16]

In response to growing concerns, Standard & Poor's downgraded its rating of Bankia's creditworthiness to BB+, making it a junk bond.^[13]

Restructuring (2012-2015)

A number of limitations were imposed as a result of having received state aid. Shareholders had to share part of the burden of the capital injection, the balance sheet had to be reduced, dividends were restricted until 2014 and the branch network (-39%) and workforce (-28%) had to be reduced.^[17]

On 28 February 2014, Spain sold a 7.5% stake in Bankia for €1.3 billion, realizing a €138 million profit. The shares were sold at 1.51 euros each.^[18]

On 7 July 2015, Bankia paid the first dividend in its history, €1,75 cents per share. On 16 October, Bankia completed the sale of City National Bank of Florida for $883 million to Chilean bank BCI. This resulted in a net gain of €117 million.^[19] At the end of 2015, Bankia had fulfilled two years ahead of schedule all the targets set by the European Commission in the BFA-Bankia Group Restructuring Plan.^[20]

Since 2015

On 23 February 2016, Fitch raised Bankia's rating to "BBB-", restoring the bank's rating to investment grade.^[21] On 8 September, Bankia announced that it was included in the Dow Jones Sustainability Index with a score of 84 out of 100.^[22]

Controversies

IPO misleading

On 27 January 2016, the Spanish Supreme Court ordered Bankia to reimburse two small investors for misleading them during its 2011 IPO. The court said that the prospectus for its public stock offering had contained “serious inaccuracies". The bank is aware of lawsuit claims totalling €819 million, and has set aside €1.84 billion in provisions for claims.^[23] On 17 February 2016, the bank announced it would fully compensate minority shareholders who participated in the IPO in exchange for returning their shares to the bank. They will receive 100% of their investment plus 1% compensatory interest per annum.^[24]

Preference shares

Bankia sold around €5 billion in complex financial products such as preference shares and subordinated debt to customers. Most of these products suffer enforced writedowns. The bank began an arbitration process in 2013.^[25]

Credit card misuse

There is a separate lawsuit against 66 individuals linked to misuse of the company's credit cards. Prosecutors are demanding a jail sentence of four and a half years for Rodrigo Rato (former president) and six years for Miguel Blesa (former head of Caja Madrid). Documents indicate that the personal spending by executives and directors totaled €15.25 million.^[26]

Headquarters

The bank has its registered office and address of the subsidiaries in Valencia, while its operational headquarters are in Madrid. It also has a representation office in Shanghai.

References

External links

Wikimedia Commons has media related to Bankia.

• Official website

IBEX 35 companies of Spain
Abengoa Abertis ACS Amadeus IT Group ArcelorMittal Banco Bilbao Vizcaya Argentaria Banco Popular Español Banco Sabadell Banco Santander Bankia Bankinter Bolsas y Mercados Españoles Caixabank DIA Enagás Ferrovial Fomento de Construcciones y Contratas Gamesa Corporación Tecnológica Gas Natural Grifols Iberdrola Inditex Indra Sistemas International Airlines Group Jazztel Mapfre Mediaset España Comunicación Obrascón Huarte Lain Red Eléctrica de España Repsol Sacyr Vallehermoso Técnicas Reunidas Telefónica Viscofan

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