BFA/Bankia said Wednesday it expects to post a record loss of 19 billion euros in 2012 before returning to profitability again the following year. It expects a net profit of 1.2 billion euros before impairments in 2015.
As part of the restricting plan imposed by Brussels in exchange for some 18 billion euros in European funding to recapitalize, the bank will shed about 6,000 jobs, equivalent to 28 percent of its current workforce of 20,589. The bank’s branch network will be cut to around 39 percent from 3,117 to between 1,900 and 2,000.
“The adjustment is bigger than we had foreseen but it leaves us with a viable franchise,” Chairman José Ignacio Goirigolzarri told reporters at a presentation of the bank’s business plan for the period 2012-2015.
The bank estimates total provisions and asset write-downs this year of 24.8 billion euros of which 12.2 billion had already been made as of the end of September.
Bankia said it plans divestments of 50 billion euros in toxic assets to the “bad bank” management corporation Sareb, the sale of stakes in companies and other portfolios and the disposal of loan portfolios.
Holders of hybrid instruments such as preferred participating securities and preferred subordinated debt will exchanged for shares at discounts of between 14 and 46 percent of their value, which could generate 6.5 billion euros in capital. No dividend payments will be made until 2014.
Bankia’s industrial portfolio includes 15 percent of insurer Mapfre, 12 percent of airline group IAG, 15.7 percent of NH Hoteles, 27 percent of real estate company Realia and 5.3 percent of Iberdrola. Goirigolzarri said Bankia plans to sell its holdings in Mapfre and IAG
Of the 17.959 billion euros BFA/Bankia is to receive from Europe, 4.5 billion has already been disbursed by the Orderly Bank Restructuring Fund (FROB). It expects to receive the rest of the funding before the end of the year.
The restructuring plan requires Bankia to focus on lending to individuals and small to midsized businesses. The bank said it plans to disburse some 52 billion in new loans through to 2015, of which 84 percent will be to companies.