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Nationalized Spanish bank has negative value of $5.49 bn

Source : IANS
Last Updated: Thu, Dec 27, 2012 05:00 hrs

Madrid, Dec 27 (IANS/EFE) Bankia, which was nationalized in May at its own request, has a negative value of 4.148 billion euros ($5.49 billion), Spain's state-backed FROB bank restructuring fund said Wednesday.

The ailing bank's parent, BFA, has a negative value of 10.4 billion euros ($13.8 billion), the FROB said in a statement.

BFA-Bankia will receive nearly half of the 39.5 billion euros ($51 billion) the European Stability Mechanism provided Spain to recapitalize four nationalized banks and help fund a "bad bank" set up to absorb toxic assets.

Early next year, Bankia, Spain's fourth-largest bank and No. 1 mortgage lender, will carry out a capital reduction to bring the value of the shares into line with the bank's net worth and to ensure, in the FROB's words, that "shareholders are the first to bear losses or restructuring costs".

The Spanish government will also inject European-provided funds into three other nationalized banks: Novagalicia, CatalunyaCaixa and Banco de Valencia, the last of which is to be sold to Caixabank SA.

The Spanish economy remains hampered by the fallout from the collapse of a long-building housing bubble, which left many of its banks saddled with toxic assets.

The Iberian nation's unemployment rate currently stands at 25.02 percent overall and more than 50 percent among young people.

--IANS/EFE

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