Bankia collapses to record loss

City A.M. Reporter
RESCUED Spanish lender Bankia yesterday posted the country’s biggest ever corporate loss of €19.2bn (£16.5bn), driven by huge writedowns on bad property assets.

But Bankia, the focal point of Spain’s banking crisis since it requested a state bailout in mid-2012, insisted that deposits were rising, non-performing loans falling and costs being cut, and kept its forecast to return to profit this year.

However, the bank faces a big challenge in a country gripped by recession and battling to reduce its government deficit.

“The clean-up has been very significant but Bankia’s main business, like much of the banking sector, is in Spain and the outlook is complicated,” said BPI analyst Javier Barrio.

Undermined by a property market crash, Spain’s banks drove the country to seek just over €40bn from its European partners last year to help clean up the troubled financial sector.

The bank took nearly €24bn of provisions on soured property loans and assets last year in a bid to wipe the slate clean. It has dumped those assets in a government-backed so-called bad bank set up as part of Spain’s deal with Europe.