Spain Values Bankia Shares at 1 Cent

 

Spain cut the nominal value of Bankia shares to 1 cent from €2 in a debt swap that will practically wipe out existing stockholders in the nationalized lender.

The holding company BFA will own about 70% of Bankia following a €15.5 billion recapitalization approved by the FROB rescue fund today, an official from the fund said at a briefing in Madrid. Investors who bought subordinated debt or preferred shares will end up with about 30% of the bank's stock.

The Bankia group helped to trigger Spain's request last year for European aid for its banking system amid concern that mounting losses at Spain's 4th-biggest lender would contaminate the finances of the government.

Spain's bank rescue fund fixed the price as the basis for converting €4.8 billion of hybrid securities including preferred shares and €10.7 billion of so-called contingent convertible bonds into stock as part of a €15.5 billion recapitalization of the lender, the fund, known as FROB, said in an e-mailed statement today. Bankia has about 2 billion outstanding shares, which closed today at 25 cents.

The group, which took about €18 billion in bailout aid, is now targeting earnings of €1.2 billion in 2015 after moving €22.3 billion of real-estate linked assets to a bad bank.

Catalunya Banc

Catalunya Banc's preferred shareholders face an average 61% haircut while perpetual subordinated debt holders face a 40 percent haircut. NCG Banco preferred shareholders' haircut will be 43% on average and owners of perpetual bonds will lose 41%.

The 1 cent valuation for Bankia is in line with the negative valuation of €4.15 billion that FROB had given the bank, the fund said. Once the reduction in the value of Bankia shares is in place, FROB plans to group the shares in blocks of 100 to give them a nominal value of 1 euros, FROB said.

The first stage in the recapitalization will be a capital increase of €10.7 billion subscribed to by FROB via Bankia's parent BFA, which it wholly owns.

The haircut for the holders of Bankia preferred shares will be 38% and 36% for holders of perpetual subordinated debt, FROB said.