TROUBLED Spanish lender Bankia received €11bn (£9.4bn) in bailout funds from Europe yesterday in the latest part of the plan to get the bank back on its feet.
The institution was hit hard by Spain’s property crisis, which has left banks across the country devastated with commercial and residential property losses.
But despite the additional support from the government’s bailout fund the lender is unlikely to see any solid recovery quickly.
Spain’s economy is still mired in recession and with unemployment at above 25 per cent and youth unemployment approaching 60 per cent, growth is not expected to emerge soon.
That is set to keep the pressure on the country’s banking sector as more debts turn bad and confidence remains very low.
Shares in the lender initially dropped 20 per cent yesterday, but Bankia’s stock recovered a little in later trading to end the day down five per cent at €0.57.
PROFILE: WHAT HAPPENED AT BANKIA
FORMED FROM SEVEN LENDERS
Bankia was created in 2010 by merging seven lenders. They hoped to gain scale and cut costs by merging, several years into the financial crisis.
Bankia’s shares began trading on 20 July 2011. In 2012 it was Spain’s fourth largest lender.
The bank initially claimed it made €41m in 2011. But it later revealed it had lost €3.3bn.
THE BOSS QUIT
By May 2012 Bankia’s troubles were becoming increasingly obvious and its chairman Rodrigo Rato (pictured) – a former head of the International Monetary Fund – quit his role at the troubled lender.
Within days the bank was effectively nationalised as Rato was no longer in a position to block the move. The lender officially asked for €19bn of aid at the end of May 2012.
BOSS CHARGED WITH FRAUD
By July 2012 Rato was charged with fraud, price-fixing and falsifying accounts, along with another 30 board members. The investigation is ongoing.
STOCK PRICE COLLAPSE
The disastrous turn of events took a heavy toll on Bankia’s shares – they fell from around €43 in February 2012 to €8 by July.
In 2012 the bank lost €19.2bn, a record bad year for a Spanish company.
Under largely government ownership the bank is being restructured – it is cutting thousands of jobs and selling its stake in firms like International Airlines Group.
As part of the plan Europe has loaned Spain’s bailout fund the money to recapitalise Bankia. Over €11bn in new shares were issued yesterday.