Spain prepares to start selling Bankia stake

Spain is preparing to start selling down its stake in Bankia SA, the bailed-out lender said yesterday, marking another milestone in the recovery from financial crisis of both the bank and the country.

Bankia, which returned to profit in 2013, said it had already held informal talks over the disposal of the government’s stake and its shares were attracting strong interest from foreign investors.

Bankia became the symbol of Spain’s financial crisis when it lost more than €19 billion ($26 billion) in 2012 because of rotten real estate holdings and it needed almost half of a €41.3 billion European aid package for Spain’s ailing lenders.

The finances of hundreds of thousands of small shareholders, including many retired savers, were practically wiped out during its rescue, making Bankia the target of fierce protests as a deep recession also squeezed Spanish consumers.

It is now becoming the unlikely poster child for Spain’s economic recovery, while even rivals such as Santander have publicly urged the state to consider an early sale.

Partial sale
Spain, which has 68 per cent of Bankia, has been considering selling a small part of its stake as soon as the first quarter of 2014, Reuters reported last month, citing official and banking sources.

"It's clear to me that there is appetite (for the stake)," chairman Jose Ignacio Goirigolzarri told a news conference after the bank posted a €512 million profit for 2013.

The decision was down to the government but the bank had held informal talks about such a sale, he said, describing these as the first phase of an eventual privatisation that will be done in chunks and could take around two years.

“It’s important that this is done with the right timing . . . that it’s done well and leaves a good taste,” he said, adding there was as yet no timetable or definitive plan for a sale.

Lloyds example
Spain, which has until 2017 to fully privatise Bankia, is keen to emulate Britain's partial sale of its stake in Lloyds Banking Group Plc, official sources have said. The UK sold 6 per cent of Lloyds in September – five years after the bank's rescue – and the bank said on Monday it was preparing for a possible second sale.

Bankia’s shares were up 1.6 per cent at €1.30 by 2.30pm. The stock, up more than 4 per cent in the year to date, last month briefly hit the €1.35 per share level at which the government bail-out happened.

Goirigolzarri said it was “not impossible” to recoup all the Bankia rescue funds. Spain, which has spent more than €61 billion propping up the financial sector since 2008 and plugged €22.5 billion into Bankia, has sold other nationalised lenders at a loss.

The bank, the fourth-biggest in Spain, said international investors held about 10.4 per cent of its capital, up from 3.8 per cent last May.
- Reuters