Bankia SA (BKIA), the nationalized lender whose record losses helped push Spain into a European bailout, is being prepared for privatization, its chairman said today, after the bank returned to profit in 2013.
The government is in the early stages of planning the privatization as there is investor appetite for a partial sale, Chairman Jose Ignacio Goirigolzarri told reporters after Bankia posted higher-than-estimated 2013 net income of 512 million euros ($690.7 million). That compares with a 19.1 billion-euro loss in 2012.
The Bankia group tapped about half of the 41 billion euros of European funds that Spain sought in 2012 to support its financial industry as losses linked to real estate threatened to overwhelm government finances. Bankia sold bonds last month in a sign of its return to favor with investors. The bank is on course to meet its strategic plan for 2015, meaning it could start paying a dividend from that year if it so decides, Goirigolzarri told analysts.
“It would be a great sign of confidence if the government sells a stake in Bankia and the sooner they can do it the better in my view,” said Fernando Pascual, an analyst at Espirito Santo Investment Bank in Madrid, in a phone interview.
Bankia closed unchanged in Madrid at 1.29 euros. The stock has jumped 132 percent since its low point in May last year of 55 cents.
Banco Santander SA (SAN) Chairman Emilio Botin said last week the time was right for the government to sell a stake in Bankia, as Spain begins to emerge from the real estate collapse that fueled a financial crisis and two recessions.
Spain’s bank-bailout fund, known as FROB, wants to name an adviser for the privatization, even as no definite plan has been drawn up for the sale, Goirigolzarri said today. The government owns about 68 percent of Bankia SA. The process will probably take at least two years and it’s important that the first stage of the sale goes well, he said.
“The privatization of such a strong stake logically will be in stages and will take some time,” Goirigolzarri said at a news conference in Madrid. “It’ll take more than one, more than two -- probably more than two years, I don’t know but in any case a long process.” Goirigolzarri said he didn’t think it was impossible that taxpayer aid for the group could be recovered.
Bankia is on course to meet its 2015 strategic plan, which includes achieving a return on equity, a measure of profitability, of 10 percent next year, Goirigolzarri said on a webcast for analysts today.
Based on that outlook, the bank could pay dividends against 2014 earnings from 2015, he said, adding that Bankia still has time to make a decision.
“We can distribute dividends and we have no restrictions,” he said. Bankia had taken a “giant’s leap” last year in the process of restructuring its business, said Goirigolzarri, adding that the lender had been on the verge of a precipice.
While the bank is sticking by its targets in its strategic plan, it’s possible it could meet objectives on cutting operating costs before next year, said Managing Director Jose Sevilla on the webcast.
Prime Minister Mariano Rajoy, who led Spain into the bailout in 2012 and out of the program last month, faces European elections this year, followed by regional and parliamentary votes in 2015. Bond and stock prices have surged in the past year as international investors, including BlackRock Inc. and Microsoft Corp. founder Bill Gates, bet on the Spanish recovery.
Bankia’s net income of 512 million euros compared with the 498.3 million-euro average estimate in a Bloomberg survey. Net interest income rose to 690 million euros in the fourth quarter from 643 million euros in the third, the bank said.
Bad loans as a proportion of total loans rose to 14.7 percent from 13 percent a year ago, Bankia said. The bank’s core Tier 1 ratio under European Banking Authority criteria rose to 11.71 percent from 11.06 percent in September.
The group, including its parent BFA, had pro-forma after-tax profit of 818 million euros in 2013, meeting its target of 800 million euros, Bankia said. BFA-Bankia, which was formed from a merger of seven former savings banks, suffered an after-tax group loss of 21.2 billion euros in 2012.
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