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Bankia

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Bankia S.A.
Company typeSociedad Anónima
BMAD: BKIA
ISINES0113307039
IndustryFinancial services
Founded3 December 2010 (2010-12-03)
Defunct26 March 2021 (2021-03-26)
FateMerged with CaixaBank
SuccessorCaixaBank
HeadquartersMadrid and Valencia, Spain
Area served
Spain
Key people
José Ignacio Goirigolzarri
(Executive Chairman)
José Sevilla
(CEO)
ProductsRetail banking, corporate banking, investment banking, private banking, asset management, finance and insurance
RevenueDecrease €3.027 billion (2017)[1]
Decrease €1.185 billion (2017)[1]
Increase €816 million (2017)[1]
Total assetsDecrease €179.098 billion (2017)[1]
Total equityIncrease €12.709 billion (2017)[1]
OwnerSpanish Government (61%)
Number of employees
Decrease 13,463 (2017)[1]
ParentBFA Tenedora de Acciones
Websitewww.bankia.com

Bankia (Spanish pronunciation: [ˈbaŋkja]) was a Spanish financial services company that was formed in December 2010, consolidating the operations of seven regional savings banks,[2] and was partially nationalized by the government of Spain in May 2012 due to the near collapse of the institution.[3][4] As of 2017, Bankia was the fourth largest bank in Spain with total assets of €179.1 billion.[5] In 2021, the bank merged with CaixaBank to create a new entity but preserving the name of the latter.

History

Formation and IPO

Bankia was formed on 3 December 2010, as a result of the union of seven Spanish savings banks that had a major presence in their historical core regions. The merger of the seven banks, known as 'cold fusion', took only four months, with the integration contract being signed on 30 July 2010.[6] Caja Madrid, which was itself owned by the government of the Community of Madrid, held controlling interest. The distribution of shares was as follows:

  • 52.06% Caja Madrid
  • 37.70% Bancaja
  • 2.45% La Caja de Canarias
  • 2.33% Caja de Ávila
  • 2.11% Caixa Laietana
  • 2.01% Caja Segovia
  • 1.34% Caja Rioja

After the merger, Bankia was initially owned by the holding company Banco Financiero y de Ahorros (BFA), and the seven banks controlled BFA. The most toxic assets from the banks were transferred to BFA, which obtained €4.5 billion from the Spanish government rescue fund FROB in exchange for preference shares with an annual interest rate of 7.75%, maturing in 2015. In 2011, Bankia offered shares to the public in an IPO.[7][8] Investment bankers found little interest in the IPO among international institutional investors. The strategy shifted to selling the stock domestically, and largely to customers of the bank itself, with 98% of the initial €3.1 billion raised by domestic sales of shares.[9] The shares of Bankia began trading on the Bolsa de Madrid on 20 July 2011, under the symbol BKIA, and the bank was listed in the IBEX 35.

Insolvency and state bailout

In 2012, Bankia was the third-largest lender in Spain, but the largest holder of real estate assets at €38 billion.[8] On 7 May 2012, Rodrigo Rato stepped down as chairman of Bankia SA, in order to clear the way for a rescue plan that the Spanish government hoped would persuade international investors of the country's financial stability. José Ignacio Goirigolzarri became the new president. Concerns about the value of Bankia's assets, and the potential for further losses in the future, prompted speculation that the Spanish government would inject up to €10 billion of new capital into the troubled bank.[10]

On 10 May, the Spanish government said it would convert its preference shares in BFA into voting shares, giving it a controlling stake of 45% in Bankia.[8] On 25 May, trading in the shares was suspended at Bankia's request.[11]

On 25 May, it was reported that Bankia SA had negotiated a further state guarantee, marking another rise in the cost of a drawn-out rescue.[12] Bankia also revised its earnings statement for 2011, stating that instead of a profit of €309 million, it had in fact lost €4.3 billion before taxes, and asked for 1.4 billion fiscal credit to reduce its loss.[11][13] The New York Times described the increasing bailout as making Spain one of the new focal points of the European sovereign-debt crisis.[14] In response to growing concerns, Standard & Poor's downgraded its rating of Bankia's creditworthiness to BB+, making it a junk bond.[12]

In the end, the rescue plans approved by the European Commission on 27 June 2012 under state aid rules included an equity injection for €4465 million and a liquidity guarantee of €19 billion to BFA, 12 of which would be provided to Bankia.[15][16]

Restructuring (2012-2017)

A number of limitations were imposed as a result of having received state aid. Shareholders had to share part of the burden of the capital injection, the balance sheet had to be reduced, dividends were restricted until 2014, and both the branch network (-39%) and workforce (-28%) had to be reduced.[17]

In addition to the financial problems, the new management had to deal with controversies related to former managements.

In 2013, Bankia returned to profitability.[18]

On 28 February 2014, Spain sold a 7.5% stake in Bankia for €1.3 billion. The shares were sold at €1.51 each.[19] Further divestment was expected for 2014 under the rescue programme, but did not happen.[20]

On 7 July 2015, Bankia paid the first dividend in its history €0,0176 per share. On 16 October, Bankia completed the sale of City National Bank of Florida for $883 million to Chilean bank BCI.[21] The bank was bought by Caja Madrid for $1.12 billion in 2008.[22] At the end of 2015, Bankia had fulfilled two years ahead of schedule all the targets set by the European Commission in the BFA-Bankia Group Restructuring Plan. The bank also reported the best efficiency, solvency and profitability among the six largest Spanish banks.[23]

On 23 February 2016, Fitch raised Bankia's rating to "BBB-", restoring the bank's rating to investment grade.[24] On 8 September, Bankia announced that it was included in the Dow Jones Sustainability Index with a score of 84 out of 100.[25]

On 27 June 2017, Bankia agreed to acquire state-owned bank BMN (Banco Mare Nostrum) for €825 million in an all-stock deal. BMN was the result of the merger of the savings banks Caja Murcia, Caja Granada and Sa Nostra.[5] On 3 November, Bankia announced that it was listed in the CDP Climate Change report for 2017 as one of a group of 112 global companies leading the fight against climate change.[26] The restructuring period will end on 31 December 2017.[27] The deadline for the privatisation of Bankia was end-2019,[28] however, in December 2018 the Government decided to postpone the privatization until end-2021.[29]

Since 2017

On 27 February 2018, Bankia announced that it plans to pay €2.5 billion to shareholders over the next three years as part of its 2018-2020 strategic plan. It aims for a profit of €1.3 billion in 2020.[30]

On 4 September 2020, it was confirmed that CaixaBank and Bankia are negotiating for a potential merger. The merger would create the biggest domestic bank in Spain with assets of €650 billion.[31] The merger was effective from 26 March 2021.[32]

Controversies

IPO misleading

On 27 January 2016, the Spanish Supreme Court ordered Bankia to reimburse two small investors for misleading them during its 2011 IPO. The court said that the prospectus for its public stock offering had contained "serious inaccuracies". The bank is aware of lawsuit claims totalling €819 million and has set aside €1.84 billion in provisions for claims.[33] On 17 February 2016, the bank announced it would fully compensate minority shareholders who participated in the IPO in exchange for returning their shares to the bank. They will receive 100% of their investment plus 1% compensatory interest per annum.[34] The offer saved Bankia €400 million in legal costs.[35]

Preference shares

Bankia sold around €5 billion in complex financial products such as preference shares and subordinated debt to customers. Most of these products suffered enforced writedowns. The bank began an arbitration process in 2013.[36] On 15 July 2016, the time limit for submissions of applications for arbitration expired.[37]

Credit card misuse

On 23 February 2017, 65 individuals received sentences for misusing the company's credit cards. Rodrigo Rato (former president of Bankia, and also a former managing director of the IMF) was sentenced to four and a half years in jail, and Miguel Blesa (former chairman of Caja Madrid) was sentenced to six years in jail.[38] The other defendants received sentences ranging from three months to six years.[39] Documents indicate that the personal spending by executives and directors totaled €12.5 million.[38] The fraud was discovered by the publication of an article on eldiario.es based on the emails of Miguel Blesa. Initially, the article did not lead to any judicial investigation. Instead, Madrid's chief prosecutor tried to initiate legal actions against the media that spread the emails of Blesa, because they were "illicitly obtained". The news led Bankia to order an internal investigation, and the bank later transferred the information to the FROB.[40][41]

Customer care

In January 2022, Carlos San Juan de Laorden, a retired urologist from Valencia with Parkinson's disease started an online petition for more human customer care at bank branches. At a malfunctioning ATM a sign informed customers that they could only be seen with appointments, but no appointments could be made by phone.[42] He gathered more than 600,000 signatures in 2 months, asking banks and other institutions to serve all citizens, and not discriminate the oldest and most vulnerable members. In Spain, the number of bank branches had shrunk to about 20,000 in 10 years since the bailout of 2012, and with the Coronavirus pandemic another 3000 branches closed in less than 2 years pushing online banking.[43]

Organisation

The bank has its registered office and address of the subsidiaries in Valencia, while its operational headquarters are in Madrid. It also has a representation office in Shanghai. The bank is organised into six business areas: Retail Banking, Business Banking, Private Banking, Asset Management and Bancassurance, Capital Markets and Investees.[44]

Bankia is listed on the Bolsa de Madrid and is a constituent of the IBEX 35.

References

  1. ^ a b c d e f "Annual Report – Consolidated Financial Statements 2016" (PDF). Retrieved 4 June 2017.
  2. ^ "Bankia Profile". Bankia.com. Archived from the original on 17 September 2011. Retrieved 17 May 2012.
  3. ^ Bjork, Christopher; House, Jonathan & Muñoz, Sara Schaefer (25 May 2012). "Spain Pours Billions into Bank". The Wall Street Journal. Retrieved 26 May 2012.
  4. ^ Abiven, Katell (25 May 2012). "Spain's Bankia seeks record bailout of €19 bn". Yahoo! News. Agence France-Presse. Retrieved 26 May 2012.
  5. ^ a b S.A., Bankia. "Bankia approves merger agreement with BMN - Press releases - In the news - Communication - Bankia". Bankia. Retrieved 27 June 2017.
  6. ^ "Creation of the Bankia Group". Bankia. Bankia. Retrieved 9 March 2016.
  7. ^ "Bankia's IPO Float hopes". The Economist. 30 June 2011. Retrieved 25 May 2012.
  8. ^ a b c Penty, Charles & Ross-Thomas, Emma (9 May 2012). "Spain Takes Over Bankia, Readies Second Bailout After Rato Quits". Bloomberg. Retrieved 25 May 2012.
  9. ^ Munoz, Sara Schaefer; Enrich, David & Bjork, Christopher (11 June 2012). "Spain's Handling of Bankia Repeats a Pattern of Denial". The Wall Street Journal.
  10. ^ "Bankia chief quits as Spain readies bailout". Reuters. 8 May 2012. Retrieved 26 May 2012.
  11. ^ a b "Bankia shares suspended amid bailout request reports". BBC News. 25 May 2012. Retrieved 25 May 2012.
  12. ^ a b Bjork, Christopher (25 May 2012). "Spain to Inject €19 Billion into Bankia, Troubled Lender Says". The Wall Street Journal. Retrieved 25 May 2012.
  13. ^ M. Jiménez (26 May 2012). "Las pérdidas antes de impuestos de Bankia son de 4.300 millones". El País (in Spanish). Retrieved 26 May 2012.
  14. ^ Minder, Raphael (25 May 2012). "Spanish Lender Seeks 19 Billion Euros; Ratings Cut on 5 Banks". The New York Times. Retrieved 25 May 2012.
  15. ^ "State aid: Commission approves state support for Spanish Bankia/BFA". European Commission - European Commission. 27 June 2012.
  16. ^ "SA.34820 Rescue measures in favour of BFA/Bankia – Spain".
  17. ^ S.A., Bankia. "Strategic Plan 2012-2015 - Strategic plan - Who we are - Bankia". Bankia. Retrieved 1 February 2016.
  18. ^ S.A., Bankia. "BFA-Bankia records profit of €213 million in Q1 2013". Bankia. Retrieved 26 February 2017.[dead link‍]
  19. ^ "Spain makes small profit on Bankia stake sale". Reuters. 28 February 2014. Retrieved 12 March 2016.
  20. ^ "Statement by the European Commission and the European Central Bank following the second post-programme surveillance mission to Spain". 13 October 2014.
  21. ^ S.A., Bankia. "Bankia closes the sale of City National Bank with a net capital gain of 117 million euros - Press releases - In the news - Communication - Bankia". Bankia. Retrieved 10 March 2016.
  22. ^ "City National Bank of Florida will be sold to a Chilean bank". miamiherald. Retrieved 25 February 2017.
  23. ^ S.A., Bankia. "BFA-Bankia Year 3 Report" (PDF). Bankia. Retrieved 1 April 2016.
  24. ^ S.A., Bankia. "Bankia obtains a net attributable profit of 731 million euros in the year to September, down 14.5% - Press releases - In the news - Communication - Bankia". Bankia. Retrieved 10 November 2016.
  25. ^ S.A., Bankia. "Bankia recognised as one of the most sustainable companies in the world following its inclusion in the Dow Jones Sustainability Index (DJSI) - Press releases - In the news - Communication - Bankia". Retrieved 13 September 2016.
  26. ^ S.A., Bankia. "Bankia recognised as one of the world's leading companies in the fight against climate change - Press releases - In the news - Communication - Bankia". Bankia. Retrieved 8 November 2017.
  27. ^ European Commission. "Restructuring and Recapitalisation of the BFA Group" (PDF). Retrieved 7 April 2017.
  28. ^ "UPDATE 1-Spain expands deadline to privatise Bankia by two years - government source". Reuters. 1 December 2016. Retrieved 6 May 2017.
  29. ^ "Spain delays Bankia privatisation again". France 24. 21 December 2018. Retrieved 8 January 2019.
  30. ^ "Spain's Bankia to pay back 2.5 billion euros to shareholders over..." Reuters. Retrieved 27 February 2018.
  31. ^ Aguado, Jesús (4 September 2020). "More bank mergers loom as Bankia, Caixabank eye big savings". Reuters. Retrieved 6 September 2020.
  32. ^ "La nueva CaixaBank inicia su andadura y negociará el ajuste tras Semana Santa". www.efe.com (in Spanish). Retrieved 27 March 2021.
  33. ^ Minder, Raphael (27 January 2016). "Spanish Supreme Court Orders Bankia to Repay 2 Investors in Its I.P.O." The New York Times. ISSN 0362-4331. Retrieved 15 February 2016.
  34. ^ S.A., Bankia. "Bankia begins returning investments to minority shareholders who acquired shares during IPO - Press releases - In the news - Communication - Bankia". Bankia. Retrieved 17 February 2016.
  35. ^ "Spanish Ex-Friar-Turned-Lawyer Counts Loss From Bankia IPO Offer". Bloomberg.com. 19 February 2016. Retrieved 6 February 2017.
  36. ^ "Barcelona Bankia branch faces asset seizure over preferential shares". El País. 23 September 2016. Retrieved 23 September 2016.
  37. ^ S.A., Bankia. "Arbitration for preferred securities - Customers - Bankia". Bankia. Retrieved 28 December 2016.
  38. ^ a b Minder, Raphael (23 February 2017). "Former I.M.F. Leader Sentenced for Embezzlement". The New York Times. ISSN 0362-4331. Retrieved 24 February 2017.
  39. ^ "Ex-IMF chief Rato sentenced to four-and-a-half years over credit card scandal". EL PAÍS. 23 February 2017. Retrieved 24 February 2017.
  40. ^ "Los consejeros de Caja Madrid tenían tarjetas de crédito en 'negro' de hasta 50.000 euros al año". eldiario.es (in Spanish). Retrieved 24 January 2017.
  41. ^ "La investigación de las tarjetas se inició por la publicación de los correos de Blesa por eldiario.es". eldiario.es (in Spanish). Retrieved 24 January 2017.
  42. ^ Viejo, Manuel (20 January 2022). "Carlos, the Spanish retiree taking on the banks". El Pais English. Retrieved 29 March 2022.
  43. ^ Minder, Raphael (25 March 2022). "'I'm Old, Not an Idiot.' One Man's Protest Gets Attention of Spanish Banks". The New York Times. ISSN 0362-4331. Retrieved 29 March 2022.
  44. ^ S.A., Bankia. "Business areas - Who we are - Bankia". Bankia. Retrieved 9 March 2016.
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