The bank of greatest concern across Europe may soon begin to recapitalize itself and ease investor fears. It's about bankia, the Spanish credit institution which it was nationalized last May due to the over 40 billion of toxic securities linked to the real estate market in its belly. According to sources cited by the Spanish newspaper El Pais, in the coming days, the Iberian banking sector will see 30 billion euros arrive. It is only a third of the maximum ceiling of 100 billion guaranteed to Spain by the European Union to recapitalize the entire banking system.
In memorandum of understanding (Mou) signed with Brussels, the EU has divided Spanish institutions into four groups. This first tranche of aid, writes El Pais, will go to nationalized institutions, the first and riskiest group. It's about Catalunya Caixa, which will receive 5 billion euros, Novagalicia (6 billion), Banco de Valencia (1,6 billion) and Bankia, which will take the rest, thus reaching a total of 23,5 billion received so far.
But not everyone is optimistic. This morning the American rating agency Standard & Poor's downgraded the non-deferable subordinated debt from "CC" to "CCC-", bringing it to the same level as that of the parent company Banco Financieroy de Ahorros (Bfa). While it maintained Bankia's long-term rating at “BB+” and that of BFA at “B+” with a negative outlook.
The downgrade, a note explains, is due to the “significant doubts surrounding the recapitalization and restructuring plan of Bankia and Bfa, despite the support it will receive directly from the government in the form of capital and indirectly from transfers of impaired assets to an external asset management company”.
It is true that the agreement with the euro zone will allow the banks to absorb their debts but it is necessary that Bankia and the Bfa "correct the restructuring plan to comply with the clauses of the memorandum".
Bankia stock on the Madrid Stock Exchange is the only positive ground among the 35 companies of the Ibex e earn 6,93% at €1,019 per share.
