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Bankia suffers biggest ever loss by Spanish bank

Source: El Pais - Sat 27th Oct 2012
Bankia suffers biggest ever loss by Spanish bank

Nationalized bank Bankia has suffered the biggest loss ever posted by a Spanish lender as a result of its ill-fated exposure to the troubled real estate sector.

Bankia was in debt by 7.053 billion euros in the first nine months of the year and posted a loss in the third quarter alone of 2.605 billion as a result of provisions to cover losses from toxic property assets.

The lender said asset impairments cost it 11.485 billion in the period, and has now covered 75% of the provisions for real estate assets required by the Bank of Spain in 2 decrees approved earlier this year.

Loans to the private sector declined 11.9% to 139.584 billion, while client resources in the shape of deposits fell 25.1%. Deposits alone fell 14.257 billion from the end of September to 98.793 billion as clients lost faith in the lender. As a result its share of the deposit market in Spain dropped from 10.4% to 9.4% in August.

Nevertheless, the bank made an operating profit in the period of 306 million before provisions, largely the result of net interest income of 744 million and commissions of 226.

Yesterday the Bank of Spain ordered the 72 Bankia Executives who were awarded bonus payments for 2011 to repay the amount recieved in full.