Business Breaking News

The Canadian Press - ONLINE EDITION

Bailed-out Bankia posts biggest loss in Spanish history at $25.2 billion in 2012

By: The Associated Press

Thursday, Feb. 28, 2013 at 7:49 AM | Comments: 0

Bankia's President, Jose Ignacio Goirigolzarri speaks during a Bankia's results press conference in Madrid Thursday, Feb. 28, 2013. (AP Photo/Daniel Ochoa de Olza)

MADRID - Bailed-out Bankia on Thursday posted a full-year net loss of €19.2 billion ($25.2 billion), the biggest ever suffered by a Spanish company, after the lender cleaned up its balance sheets of bad property loans and other risky investments.

The bank transferred loans worth some $22.3 billion to the new Spanish "bad-bank", which was set up to take on the banking sector's toxic assets. BFA, Bankia's parent company, set aside €26.8 billion in provisions. The group's overall net losses were €21.2 billion.

Spain's partners in the 17-strong group of European Union countries that use the euro granted Bankia an €18 billion bailout last year to strengthen its shaky balance sheet. The loan was part of a €100 billion credit line earmarked for Spain's banks so that the cost of rescuing them would not sink the Spanish government's finances and force it to demand a sovereign bailout.

Bankia S.A. was formed in 2010 by merging seven savings banks. Back then it was one of Spain's top financial entities and heralded as the solution to the country's banking problems following the collapse of the once-booming real estate sector in 2008.

The 2012 results were more than six times bigger than the €3 billion losses suffered in 2011. Just months prior to being nationalized last May, Bankia had been reporting €309 million in profits in 2011. Bankia lost €14.5 billion in deposits last year while its bad-loan ratio shot up to 13 per cent from 7.6 per cent in 2011.

The National Court is now investigating suspected mismanagement at Bankia by its former president —ex-ruling Popular Party minister and ex-IMF chief Rodrigo Rato — and 32 other one-time Bankia board members. Rato has not been charged with any crime.

The bank, which is to shed some 6,000 staff, said Thursday it hoped to return to profit in 2013.

The bank's shares, which have plummeted over the past few months, were flat at €0.3 in morning trading in Madrid.

Rate this
This article has not yet been rated.

We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

You can also register and/or login to the site and join the conversation by leaving a comment.

Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Comments

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Comment

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.