After pressure made by European Central Bank (ECB) and International Monetary Fund (IMF) for government to accelerate privatization of Bankia, state, through FROB, has given order to sell 7% of its shares in market. After this operation, state will pass from controlling 67.63% to 60.63%. The system used is an accelerated placement of shares that have a market value of 840,470,000, since shares closed quotation this Monday to 4.17 euros. The placement will be made between investment funds, pensions and international insurers and is scheduled to close night of this Monday with a discount of less than 4% on closing of Monday. Bankia's leaders have repeatedly expressed mselves in favor of privatization because y believe it is good to give more liquidity to value to bring more investors and close future sales.Learn More
- The big Spanish banks win 11,783,000,000 to September, 16.1% more
- Bankia expects government to privatized anor package of actions before Christmas
- Economy prepares placement of up to 9% of Bankia in stock Exchange
According to plans, on morning of Tuesday, December 10, sale of 7% of shares will be closed. In a statement sent to securities regulator, it is announced that three settling entities will be Deutsche Bank, Morgan Stanley, International and UBS. In February of 2014 state already sold anor 7.5% of shares of nationalized Bankia. At that time it succeeded with package (which had day that a market value was commercialized of 1.365 billion euros) 1.304 billion euros. At that time it was sold at six euros per share, now it will be about four. This time state is likely to get about 800 million.
With se prices, government will sell slightly below last valuation of Bankia, located at 12,346,000,000, according to last report of Court of Auditors. This Monday Bankia closed with a capitalization of 12.4 billion and will be sold with discount. Of course, it will also be below rescue cost, which is located at 22,424,000,000.
Why is government now selling? After living bad months, banks have been reverted to investors because new capital agreement called Basillea III has been closed, which will not require large efforts of additional own resources. In fact, since last November 21st, Bankia has risen by 10% in stock market. The government studied possibility of taking out a package of shares in October, but instability created by situation in Catalonia discouraged it, according to knowledgeable sources of operation. Now, sovereignty factor has ceased to be a destabilizing factor in stock market, even if it could be again after 21-D.Two years to privatize 60% of bank
After this operation, Government has until end of 2019 to privatize 60.63% that will still have Bankia after this placement. At rate that has gone, with sale of 15.5% of shares since 2014, will not meet objective so it is obliged to accelerate process of privatization, a factor that could influence and pressure on value quotation.
The key question is how much will be recovered from 22,424,000,000 taxpayers injected in Bankia. According to current price, to return all money, Bankia should raise a 150% in stock in two years, something no one expects. In an interview published last Saturday in newspaper of Catalunya, José Ignacio Goirigolzarri, president of Bankia, asked about this topic, replied that "has already 1.8 billion and reintegrated 5 billion to preferentistas and retailers of Exit to bag. That everything is returned or not going to depend on an extraordinary form of price that market gives to financial system and of evolution of types. "But regardless of what final return is, Bankia bailout decision was right without a doubt."The future of Bankia, key to sector
The Government had been preparing for placement of anor stock package of entity and minister of Economy, Luis de Guindos, commented that it would probably take place in fall. The forecast was to draw between 7% and 9% of shares. Both ECB and IMF consider that Spanish banking restructuring is ending, but closing of privatization of Bankia is a capital element, which will determine how financial map has been set up. If entity presided by José Ignacio Goirigolzarri remains independent or sold to a competitor, it is biggest unknown on Spanish banking.
Luis de Guindos, Minister of economy, seems to have taken advantage of interest of international investors, as well as that privatization of Bankia does not provoke political complaints from or parliamentary groups. Moreover, if not done now, it would not be possible to sell shares of Bankia until second half of February because entity will present results in January and, at that time, it is forbidden to place capital. This placement is done shortly before closing of merger of Bankia with BMN, which will involve exit of workers and closures of offices.
During same afternoon, entities are developing activities of diffusion and promotion of placement "in order to obtain indications of interest or proposals of acquisition of actions by potential investors", according to Release. Once procedure is closed, probably tonight, result will be released with a communication to National Securities Market Commission.