At any moment the Spanish real estate bubble will burst or, for the most optimistic, it will slowly deflate. Meanwhile, the loser is Bankia, the bank born in 2010 from the merger of 7 savings banks in difficulty and the fourth institution in the country. Bfa (Banco Financiero y de Ahorros), the parent company of the group, Presents 19,6 billion non-performing loans linked to the real estate market. But Madrid, on the impetus of the International Monetary Fund, has already thought about how to remedy it. When the markets close, Spanish Prime Minister Mariano Rajoy will proceed with the nationalization of the bank, transforming the 4,6 billion injected into the institution by Frob – the 54 billion bank restructuring fund created to deal with the real estate emergency – into state capital. Madrid's stake will not exceed 45% of Bfa.
But there are many uncertainties about the case and the echo of the indignados has not failed to make itself heard. Furthermore, hundreds of people have already run to the counters to withdraw their savings from the bank which owns about 10% of Spanish deposits.
The sufferings – Bfa, the parent company of Bankia and where all the group's real estate assets have been placed, ha 37,51 billion loans in construction and real estate development. An abyss compared to the other major Spanish banks: Santander presents 23,45 billion, BBVA 14,15 and Caixabank 22,43. Of these 37,5 billion the 47,5% is problematic: 10,56 billion are of dubious collection (the installments have not been honored for three months already); 7,28 billion are considered below standard (there is a real risk of them becoming defaulters) and 1,74 million are already irrecoverable. In total, the dangerous exposure would be around 20 billion, of which, however, the Group is only able to cover 11,9 billion. Therefore, between 5 and 10 billion euros would be needed to restore the bank's balance sheet.
The government – No problem, Madrid will take care of it. In fact, it seems that already today, when the markets close, the Government will get its hands on the 4,6 billion injected into the bank through the restructuring fund. But that's just the beginning. The second step is to inject a further 8-10 billion into the bank – with an interest rate of 8%, therefore at least 560 million a year. In 2011, Bankia alone reported a net profit of 304 million euros: it is unlikely that in 2012 the institute would be able to pay such a high sum of interest. But we will have to wait for the data from the consolidated financial statements, which the auditing agency Deloitte has yet to disclose.
Deloitte – The consultancy firm in charge of shedding light on Bankia's accounts asked for more time to process the 2011 values, blaming the difficult merger: the Group's true balance sheet will therefore only be known after the publication of these data. Europa press reported that Bankia paid 5,8 million to the auditing agency.
The Rat case – Yesterday Rodrigo Rato, president of Bankia, but also ex-minister of Finance and ex-director general of the International Monetary Fund, announced his resignation proposing as successor Josè Ignacio Goirigolzarri, former CEO of BBVA, Spain's second largest bank. And the controversy escalated after the news broke that Rato is entitled to a liquidation of 1,2 million euros.
