Bankia among Span­ish lenders win­ning EU ap­proval for res­cue

The Pak Banker - - Front Page -

MADRID

BFA-Bankia SA (BKIA) and three other Span­ish na­tion­al­ized lenders won Euro­pean Union ap­proval for government bailouts, paving the way for them to re­ceive re­cap­i­tal­iza­tions next month.

Bankia, No­va­gali­cia Banco and Catalunya Banc will re­duce bal­ance sheets by more than 60 per­cent by 2017 com­pared with 2010, exit real-es­tate lend­ing and limit their whole­sale busi­nesses, the Euro­pean Com­mis­sion said Wed­nes­day.

The re­struc­tur­ing plans agreed with EU reg­u­la­tors will cre­ate a health­ier fi­nan­cial sys­tem and “a sol­vent base to play an ac­tive role in the growth of Spain from now on,” EU Com­pe­ti­tion Com­mis­sioner Joaquin Al­mu­nia said in the state­ment.

The EU de­ci­sion will al­low Spain’s res­cue fund, the FROB, to re­ceive as much as 100 bil­lion eu­ros ($130 bil­lion) of aid from the EU to help sta­bi­lize its bank­ing sys­tem in the first half of De­cem­ber, the Bank of Spain said yes­ter­day. The FROB will re­cap­i­tal­ize the banks “once the nec­es­sary corpo- rate op­er­a­tions have been com­pleted,” it said in an emailed state­ment.

Spain has pledged to sell No­va­gali­cia Banco and Catalunya Banc within five years or wind them down. Banco de Va­len­cia was bought by Caix­aBank SA for 1 euro yes­ter­day. The re­struc­tur­ing plans fore­see “subor­di­nated li­a­bil­ity ex­er­cises” and the trans­fer of im­paired as­sets to Spain’s bad bank, a process that will re­duce the Bankia group’s cap­i­tal needs to 17.96 bil­lion eu­ros and those of No­va­gali­cia Banco to 5.43 bil­lion eu­ros and 9.08 bil­lion eu­ros for Catalunya Banc, the com­mis­sion said. Banco de Va­len­cia’s cap­i­tal needs are 4.5 bil­lion eu­ros.

Some 45 bil­lion eu­ros in as­sets will be trans­ferred to the Span­ish bad bank, Sareb, Al­mu­nia told re­porters in Brus­sels to­day. Bankia, No­va­gali­cia Banco and Catalunya Banc will sell units to help fund the re­struc­tur­ing, Al­mu­nia said. Their pre­ferred share­hold­ers and other subor­di­nated debt hold­ers will ab­sorb losses and pay some of the costs of the re­struc­tur­ing, re­duc­ing Span­ish government sup­port by about 10 bil­lion eu­ros, the EU said in the state­ment. The banks will be banned from mak­ing ac­qui­si­tions or coupon pay­ments and from us­ing state aid for com­mer­cially ag­gres­sive prac­tices.

Al­mu­nia said he plans to de­cide on re­struc­tur­ing plans for Liber­bank SA, Banco Mare Nos­trum SA, Banco Caja 3 and Ceiss on Dec. 20.

Bankia, a na­tion­al­ized lender that in May re­quested 19 bil­lion eu­ros from the government to clean up bad loans, is plan­ning to an­nounce a new strate­gic plan through 2015 later to­day. Chair­man Jose Ig­na­cio Goirigolzarri told share­hold­ers in June the bank would seek to re­duce its 60 bil­lion eu­ros of non- yield­ing as­sets by more than half over three years.

Al­mu­nia said the sale of Banco de Va­len­cia to Caix­aBank SA ( CABK), Spain’s third-largest lender, was cheaper than wind­ing down the bank which he said was no longer vi­able with­out state sup­port. FROB will pro­vide Banco de Va­len­cia a 4.5 bil­lion- euro cap­i­tal in­jec­tion, the fund and Caix­aBank said in sep­a­rate state­ments. FROB will then trans­fer its stake, which will be at least 90.9 per­cent, for 1 euro, Caix­aBank said.

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