Even if Bankia has managed to delay its publication, today it has to deal with its numbers in the red. The balance sheet of the parent company of Bankia, Banco Financiero y de Ahorros (Bfa) revealed a net loss of 3,318 billion euros, against a profit of 41 million in 2010. But above all he declared that he possess a volume of toxic assets linked to the real estate market equal to 41,785 billion euros. The Group's accounts were controlled by the Comision Nacional del Mercado de Valores (Cnmv), the Spanish Consob.
Bfa stated to be in technical bankruptcy, with negative equity of €4,489 billion, i.e. the set of liabilities (debits, customer deposits and other liabilities) is less than the assets (cash flow, equity investments, receivables and other assets). In a normal situation this obliges the institution to liquidate. But in the case of the Bankia Group, the technical bankruptcy will be resolved with a capitalization of 4,465 million euros of equity investments by the Banking Restructuring Fund (Forb) and one new initiation of 19 billion public funds.
Looking instead at consolidated financial statements of Bfa, the holding that brings together the seven savings banks including Bankia, negative own funds were recorded for 3,48 billion while shareholders' equity was positive for 2,78 billion, mainly thanks to the participation of Bankia's small shareholders. The consolidated loss is 4,95 billion, the largest ever recorded in the history of Spanish finance and 164 times the value initially announced (30,25 million). Even so, Bfa Group's core capital is only 4,7% of RWAs, when European authorities are demanding a Core Tier of at least 9%.
A few days ago the Authority had reviewed Bankia's accounts which revealed an increase in problematic assets of 9,98 billion. So in total Bankia's toxic assets amount to 30,95 billion euros, of which 8,69 billion in unpaid loans and 7,88 billion in delinquent loans.
Meanwhile in Madrid, Bankia stock continues to plummet losing 7,75%, after closing yesterday with -13%. The Ibex travels in the red at -1,80%.
Yesterday a Spanish government source stated that Madrid could recapitalize Bankia through the contribution of government bonds and receiving shares in exchange. The idea would be to use public bonds as collateral in the ECB's liquidity operations, a method that would effectively involve Frankfurt in the restructuring of the Spanish banking system.
Last week Bankia asked the government for 19 billion euros to avoid bankruptcy. A few days earlier, the Group declared that it did not need more than 7 billion, and yesterday it declared that it may need more aid.
On 9 May, the institute was partially nationalized with an outlay of 4,5 billion euros. Yesterday, Prime Minister Mariano Rajoy declared: "We were forced to intervene on Bankia, the alternative was bankruptcy".
