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Bankia Wins Initial EU Approval for Stock Conversion, Guarantee

June 27 (Bloomberg) -- Crisis-hit Spanish lender Bankia SA won temporary approval from European Union competition regulators to convert 4.465 billion euros of preference shares in an attempt to boost the bank’s core capital.

The European Commission, the 27-nation EU’s executive arm, also provisionally approved a 19 billion-euro liquidity guarantee for the lender, the regulator said in an e-mailed statement. The measures apply to both Bankia and its parent firm BFA, the commission said.

“There is no doubt that the beneficiary will need to undergo deep restructuring,” Joaquin Almunia, the bloc’s antitrust chief, said in the statement.

Spain formally requested a bailout for its banks this week as the nation struggles to bolster the resilience of some of its lenders. The request followed the nationalization of Bankia, which subsequently sought 19 billion euros of government funds.

“The conversion of preference shares into capital will simplify the ownership structure of BFA, which becomes fully state owned, thus making the necessary restructuring decisions easier to take,” Almunia said.

Spain has committed to provide a restructuring plan for Bankia and BFA to EU antitrust regulators within six months, the commission said.

Link to Company News: {BKIA SM <Equity> CN <GO>}

To contact the reporters on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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