The government is considering selling a stake of around 10 percent in nationalized bank Bankia in the next few months after the recent rally in its share price, which has seen the lender’s market capitalization increase by 82 percent over the past few months.
Bankia’s share price in early afternoon trading was at 1.35 euros, the same price the state Orderly Bank Restructuring Fund (FROB) paid in a capital increase of 10.620 billion euros through Bankia’s parent BFA. The state has injected a total of 22.424 billion euros in the lender since it was nationalized in May 2012 after it came unstuck because of its exposure to the ailing real estate sector. The FROB controls 68 percent of Bankia through BFA.
Sources close to the possible share-sale operation said it would not take place until the gains in Bankia’s share price have been consolidated to “avoid falls and possible losses at the last minute.”
The government said Monday that the state expects to lose 15 billion euros in taxpayers’ money as a result of the nationalization of savings bank CAM, which also fell victim of the real estate sector. The government has borrowed some 41 billion euros from its European partners to clean up the balance sheets of the nationalized banks, which also include NCG and Catalunya Banc. NCG was sold at the end of last year to Venezuelan lender Banesco at an estimated loss to taxpayers of 8 billion euros. Catalunya Banc may be sold off in bits.
The sources said the government has made initial contact with investment banks on the possible sale of 10 percent of Bankia in small packages to professional investors in order not to depress the share price. If this operation goes well, a further 15 percent may be sold in the second half of the year.
This would be a similar strategy to that adopted by the US government with nationalized insurer AIG, in which it injected 182.7 billion dollars and recovered 22.7 billion in its privatization through a series of six rounds of share sales.
In order for the government to fully recover the money it injected in Bankia, its share price would have to rise to 3 euros, something the administration views as very unlikely.