Bankia to hive off its toxic assets

BANKIA, Spain’s biggest savings bank, said yesterday it would create a bad bank for toxic assets such as repossessed land, ahead of a stock market listing expected later this year.

Bankia, formed from seven regional banks including heavyweight Caja Madrid, said it would seek a stock market listing with a net book value of €12bn (£10.5bn) and assets totalling €270bn.

Spain’s second-biggest savings bank La Caixa said in January it would hive off its real estate assets into an unlisted company before reversing its banking business into its already listed Criteria unit.

Spain’s government has told its savings banks, known as cajas, to raise their solvency ratios to tough new minimum levels, either by getting private capital on board or accepting state funds. Spain is under pressure to reassure markets on the solvency of its financial system, even more so after Moody’s cut the credit ratings of seven Portuguese banks yesterday.

Banco Financiero y de Ahorros (BFA) will be the unlisted unit and include repossessed land and doubtful real estate loans, Bankia said.