Nationalized lender Bankia announces return to profits

Privatization of bank could be complete within two years

Madrid -
Bankia Chairman José Ignacio Goirigolzarri, during Monday’s press conference.
Bankia Chairman José Ignacio Goirigolzarri, during Monday’s press conference.Samuel Sánchez

Spanish lender Bankia returned to profit in 2013, after its recapitalization and its multimillion losses the previous year. The nationalized bank — which was formed after the merger of a number of Spain’s savings banks, including Caja Madrid — announced on Monday net profits of 509 million euros.

Bankia Chairman José Ignacio Goirigolzarri announced at a press conference that the bank had reduced its provisions for the deterioration of assets from 19 billion euros in 2012 to less than 1.5 billion. This, in addition to the capital gains from the sale of assets — as required by Brussels in exchange for a bailout — as well as tax credits, meant the lender turned a profit.

Bailout conditions

The BFA-Bankia group was the recipient of around half of the 41-billion-euro bailout that was granted to Spain by the so-called “troika” of the IMF, the EU and the ECB in order to recapitalize its troubled lenders, whose balance sheets had been decimated by their exposure to the real estate market. One of the conditions of this bailout was that the lender cut staff and closed branches. The bank announced on Monday that it shut 1,119 offices in 2013, a 36-percent decrease on the previous year, and that its employee numbers were down 23 percent compared to 2012.

Goirigolzarri also announced on Monday that the privatization of the lender could be complete within the space of two years. The process, he said, would be “very good news” as it would mean the bank’s “normalization.”

Speaking about the more than 22 billion euros of public funds that BFA-Bankia received, Goirigolzarri said that it was “impossible right now to say whether or not that money is going to be recovered.”

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