Spain's Bankia says sure of securing massive state bailout

Spain's fourth-biggest bank Bankia said Saturday it was certain of securing the 19 billion euros ($24 billion) in state aid it is seeking in the largest bank bailout in the country's history.

Bankia president Jose Ignacio Goirigolzarri sought to reassure investors and the public about the future of the struggling bank at a press conference called the day after it announced huge losses and asked for a government rescue.

The plight of Bankia -- which holds some 10 percent of the nation's bank deposits -- has added to the concerns over the massive debt crisis gripping Spain and the rest of the eurozone.

"I am certain that the Spanish state will obtain the financing so we will receive the 19 billion euros. That's the commitment," said Goirigolzarri, adding that he expected to get the funds in July.

The funding will be part of a recapitalisation plan which the bank's board approved on Friday and is backed by the government and the Bank of Spain.

At the press conference in Madrid, Goirigolzarri stressed that after the recapitalisation, Bankia would be "solid, efficient and profitable".

The Spanish government has already spent 4.5 billion euros on Bankia after the lender was partially nationalised earlier this month.

The new bailout will bring to 23.5 billion euros the total amount of the government's rescue funding for the bank, which was formed in 2010 from a merger of seven troubled regional savings banks.

Bankia had to revise its 2011 results to show a net loss of 2.979 billion euros due to write-downs in its loan portfolio, instead of a net profit of 309 million euros.

Spanish banks are at the heart of market fears that Spain itself, the eurozone's fourth-largest economy, could be forced to seek an international financial bailout.

Under the recapitalisation plan it approved Friday, Bankia's parent group Banco Financiero de Ahorros (BFA) will ask Spain's bank restructuring fund FROB to subscribe to a capital increase of 19 billion euros.

Bankia will then launch a 12 billion euro capital hike which will be underwritten by BFA.

Goirigolzarri on Saturday defended the bank's former management team.

"We must be absolutely careful in our judgements," he said, noting that his predecessor Rodrigo Rato had to deal with a "very complex" situation.

Rato, a former economy minister and head of the International Monetary Fund, and his team had been forced to resign.

"I am not here to launch a purge," Goirigolzarri said when asked about a possible probe into events at the bank, whose shares have plunged to half their value since listing in July 2011i.

Goirigolzarri blamed the massive loss on the economic crisis, which saw the collapse in 2008 of Spain's real estate market -- a pillar of the country's economy -- after a decade-long boom.

Bankia had the sector's largest exposure to the property market of 37.5 billion euros at the end of 2011, of which 31.8 billion euros were classed as problematic, according to figures from the Bank of Spain.

Standard & Poor's on Friday downgraded Bankia to BB+, one notch into junk status, from BBB- and also cut its rating for the parent group BFA, which was already in the junk status of BB-, to B+, four notches into junk territory.

Standard & Poor's also cut its rating for Bankinter, Banco Popular and Banca Civica.

Daniel Pingarron, an analyst at Spanish brokerage IG Markets, said Friday the injection of public funds into Bankia to save it "will not change things very much".

"What will happen is the FROB funds will run out, the fund will have to be replenished with public debt, and that does not sent a message of confidence," he added.

Bankia is considered key to the country's financial system and therefore cannot be allowed to fail as it would contaminate the entire sector.

The Expansion newspaper said eight banking institutions in Spain had received public funds totalling 32.869 billion euros and another 6.2 billion from private investors.

Prime Minister Mariano Rajoy's conservative government this month instructed Spain's banks to set aside an extra 30 billion euros in 2012 in case property-related loans go bad, on top of 53.8 billion euros required under reforms enacted in February.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Philippine, Vietnam troops play sports on disputed island
    Philippine, Vietnam troops play sports on disputed island

    Filipino and Vietnamese troops played football and tug-of-war on a disputed South China Sea island on Wednesday, officials said, closing ranks as their rival China ramps up construction of artificial islands. The games took place on Philippine-held Northeast Cay, just 2.7 kilometres (1.7 miles) from Southwest Cay which is controlled by Vietnam, where a similar contest was held last year. "It was a navy-to-navy confidence-building engagement," Vice Admiral Alexander Lopez, the Philippine …

  • ‘Inland areas could be exposed to tsunami-like waves’
    ‘Inland areas could be exposed to tsunami-like waves’

    While strong earthquakes cause tsunamis in coastal areas, the Philippine Institute of Volcanology and Seismology (Phivolcs) warned that inland areas could also be exposed to tsunami-like waves, or seiche, if located near or around bodies of water. In a recent earthquake awareness seminar in Muntinlupa, Phivolcs supervising science research specialist Joan Salcedo explained that a seiche is a large wave similar to a tsunami, triggered by strong ground shaking from an earthquake or volcanic …

  • China gives ‘gentle reminder’ to Phl, warns small nations
    China gives ‘gentle reminder’ to Phl, warns small nations

    China gave the Philippines a “gentle reminder” last Tuesday that Beijing will not bully small countries but warned these nations not to make trouble willfully and endlessly. “Here is a gentle reminder to the Philippines: China will not bully small countries, meanwhile, small countries shall not make trouble willfully and endlessly. The Chinese Foreign Ministry also said that China would continue to build other civilian facilities on relevant maritime features in the disputed Spratly Islands …

  • Back-channel diplomacy pushed for Phl-China dispute
    Back-channel diplomacy pushed for Phl-China dispute

    The Philippines should consider backchannel diplomacy to prevent its territorial dispute with China from deteriorating further, Sen. Ferdinand Marcos Jr. said yesterday. There are a lot of Filipino businessmen with businesses in China and they have friends and connections there. Let’s utilize that, ask them to talk to their friends on how we can resolve this matter peacefully,” Marcos said. …

  • Phl, Japan to deepen ties amid China sea claims
    Phl, Japan to deepen ties amid China sea claims

    Japan and the Philippines are set to bolster security ties when President Benigno Aquino visits Tokyo next week, the latest move by Prime Minister Shinzo Abe to beef up cooperation with Southeast Asian nations facing China’s growing naval ambitions. The two sides will likely agree to start talks on a framework for the transfer of defense equipment and technology and to discuss a possible pact on the status of Japanese military personnel visiting the Philippines to facilitate joint training and …

  • Phl, Vietnam troops play soccer on disputed isle
    Phl, Vietnam troops play soccer on disputed isle

    Vietnamese and Philippine troops played soccer and sang karaoke on a South China Sea island yesterday in a sign of the growing security ties between the two Southeast Asian nations most at odds with Beijing over the contested waterway. Cooperation has blossomed between Hanoi and Manila since they shelved decades of enmity over their competing claims in the Spratly archipelago to try to counter China, whose creation of artificial islands in the region will allow it to project power deep into …

  • Noy swears in 50 newly appointed AFP officers
    Noy swears in 50 newly appointed AFP officers

    President Aquino administered yesterday the oath taking of 50 newly appointed generals and officers of the Armed Forces of the Philippines (AFP) in a simple ceremony at the Rizal Hall of Malacañang Palace. …

  • Taiwan’s peace call on claimants of disputed territories welcomed
    Taiwan’s peace call on claimants of disputed territories welcomed

    The US on Tuesday welcomed Taiwan’s call on all claimants to disputed shoals, reefs, rocks and islets in the South China Sea and West Philippine Sea to exercise restraint, refrain from unilateral actions that could escalate tensions, as well as to respect international law as reflected in the United Nations Convention on the Law of the Sea. “With regard to the maritime claims and the claims to sovereignty over land features in the South China Sea, our position is that maritime claims must …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options