ZCZC
BCN-16
SPAIN-BANKING-PRIVATISATION-BANKIA
Spain delays Bankia privatisation again
MADRID, Dec 22, 2018 (BSS/AFP) – Spain on Friday again pushed back a
target date for the sale of scandal-ridden Bankia, which the government took
over during the financial crisis, saying it wanted to keep its timing
flexible.
The finance ministry said it would now offload up its majority stake in the
bank, Spain’s fourth-biggest, to the private sector by December 2021 instead
of the previous deadline of December 2019.
In 2011, the Spanish government spent 22 billion euros ($25.1 billion at
current exchange rates) to save Bankia from collapse, a controversial rescue
at a time when the Spanish economy was sinking into crisis and Bankia was
seen as a symbol of financial excess.
Madrid even had to ask the European Union to help it pay for the rescue.
A law passed in 2012 stipulated that the bank, in which the government
holds 61.4 percent, had to re-privatised within five years.
This 2017 deadline was subsequently extended by two years to end-2019 but
market conditions have turned very difficult in recent months and the outlook
is uncertain, giving the government pause for thought.
The ministry accordingly said Friday it wanted to “carry out its
disinvestment strategy with greater flexibility to encounter favourable
market conditions”.
Even ahead of Friday’s decision, Finance Minister Nadia Calvino said that
Bankia’s share price “does not reflect the bank’s intrinsic value”.
At the end of 2017, the government managed to recover 3.0 billion euros of
its total outlay.
Bankia was formed in 2010 by the merger of seven savings banks which were
themselves in difficulty after a real estate bubble burst in 2008.
Its former management team is currently on trial for falsifying Bankia’s
balance sheet and fraud ahead of the bank’s failed stock market flotation in
2011 which was followed months later by the government bailout.
In its latest financial statement, Bankia in October reported a 1.8 percent
increase in third-quarter profits to 229 million euros.
On Friday, Bankia shares were down 3.3 percent at 2.55 euros following the
announcement.
This translated into a market value of under 8.0 billion euros for the
entire bank.
BSS/AFP/HR/1100