Bankia awaits share valuation
As Spain’s nationalised Bankia awaits an imminent announcement on the valuation of its shares, the last step in the clean-up of the bank, the government is pressing ahead with a new partial merger which could slow its recovery.
The tens of thousands of Spaniards who bought shares in the savings bank in 2011 will soon find out that each share they hold is worth just 0.01 euro, a valuation insisted upon by EU regulators as Bankia prepares to get €18 billion (Dh86.4 billion, $23.3 billion) of European rescue funds.
While the bank is showing tentative signs of recovery, official and banking sources said the government will hire an international consultant to come up with a plan to partially merge Bankia with CatalunyaBanc and NCG Banco, two other rescued lenders, which it wants to operate under a single holding company.
The plan emerged unexpectedly earlier this month after the Bank of Spain failed to auction off CatalunyaBanc. The cancelled sale was a sign of possible cracks emerging in the country’s ongoing financial reform. Bankia’s execu- tives have not yet been briefed on the plan.
“It is an unexpected distraction. Things were starting to fall in line well,” said a banking source with knowledge of Bankia’s thinking.
After requesting a bailout last year and meeting strict conditions such as imposing steep losses on small savers who invested into the bank, the announcement of the valuation on Friday was meant to mark a fresh start for the lender.
Bankia in February reported tentative signs of recovery and said it would return to profit this year after deposits rose at the end of 2012 and it began cutting costs.
The other two banks, however, are expected to report losses in 2013 and 2014. Also, the government could end up having to renegotiate with the EU some terms of the rescue of the banks, if their operations are joined.
The government insists it will not fully merge the three banks and that the lenders will join forces on marketing, negotiating terms on major purchases and other items. It also says that creating a single holding operated by Bankia’s top executives will not weigh on the lender’s capacity.