Bankia losses set to spiral as housing market falls further

Tim Wallace
Follow Tim
TROUBLED Spanish lender Bankia is set to report enormous losses in the first half of the year, analysts warned yesterday ahead of its financial results, due to be released on Friday.

It was nationalised in May after asking for €19bn (£15bn) of state aid, when it was revealed the bank had lost €2.98bn in 2011 rather than the €300m profit initially reported.

At the time the new boss Jose Ignacio Goirigolzarri said Bankia needed to come up with €14bn this year to cover losses.

But plummeting house prices and rising unemployment are set to make that picture even worse, as more debts turn bad.

“Losses could be even higher in the first half of 2012 than for the whole of 2011 when they had to restate their figures”, said analyst Nuria Alvarez from brokerage Renta Four.

“If they stick to the same criteria they used when they presented their recapitalisation plan losses will be huge due to high provisionings to clean up its credit portfolio.”

Those losses are expected to come in at roughly €4bn for the first six months of the year – worse than the losses for the whole of 2011 as the country’s recession worsens further.