Bankia posts biggest $ 25.2 bn loss in Spanish history - Fri Mar 1 14:43:13 2013
01 Mar 2013 02:43 GMT
 

MADRID: Bailed-out Bankia yesterday posted a full-year net loss of 19.2 billion euros ($ 25.2 billion), the biggest ever suffered by a Spanish company, after the lender cleaned up its balance sheets of bad property lo (more)

MADRID: Bailed-out Bankia yesterday posted a full-year net loss of 19.2 billion euros ($ 25.2 billion), the biggest ever suffered by a Spanish company, after the lender cleaned up its balance sheets of bad property loans and other risky investments.
The bank transferred loans worth some $ 22.3 billion to the new Spanish “bad-bank”, which was set up to take on the banking sector’s toxic assets. BFA, Bankia’s parent company, set aside 26.8 billion euros in provisions. The group’s overall net losses were 21.2 billion euros.
Spain’s partners in the 17-strong group of European Union countries that use the euro granted Bankia an 18 billion euros bailout last year to strengthen its shaky balance sheet. The loan was part of a 100 billion euros credit line earmarked for Spain’s banks so that the cost of rescuing them would not sink the Spanish government’s finances and force it to demand a sovereign bailout.
Bankia S.A. was formed in 2010 by merging seven savings banks. Back then it was one of Spain’s top financial entities and heralded as the solution to the country’s banking problems following the collapse of the once-booming real estate sector in 2008.
The 2012 results were more than six times bigger than the 3 billion euros losses suffered in 2011. Just months prior to being nationalized last May, Bankia had been reporting 309 million euros in profits in 2011. Bankia lost 14.5 billion euros in deposits last year while its bad-loan ratio shot up to 13 percent from 7.6 percent in 2011.
The National Court is now investigating suspected mismanagement at Bankia by its former president — ex-ruling Popular Party minister and ex-IMF chief Rodrigo Rato — and 32 other one-time Bankia board members. Rato has not been charged with any crime.
The bank, which is to shed some 6,000 staff, said yesterday it hoped to return to profit in 2013.
The bank’s shares, which have plummeted over the past few months, were flat at 0.3 euros in morning trading in Madrid.

Reproduced with permission from Arab News



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