* Chairman says has held talks over state's stake
* Says there is market appetite for state sale
* Bankia shares rise 1.6 percent by 1430 GMT
* Bankia Q4 2013 net interest income up 7 pct from Q3
By Sarah White and Jesús Aguado
MADRID, Feb 3 Spain is preparing to start
selling down its stake in Bankia SA, the bailed-out
lender said on Monday, marking another milestone in the recovery
from financial crisis of both the bank and its home country.
Bankia, which returned to profit in 2013, said it had
already held informal talks over the disposal of the
government's stake and its shares were attracting strong
interest from foreign investors.
Bankia became the symbol of Spain's financial crisis when it
lost more than 19 billion euros ($26 billion) in 2012 because of
rotten real estate holdings and it needed almost half of a 41.3
billion euro European aid package for Spain's ailing lenders.
The finances of hundreds of thousands of small shareholders,
including many retired savers, were practically wiped out during
its rescue, making Bankia the target of fierce protests as a
deep recession also squeezed Spanish consumers.
It is now becoming the unlikely poster child for Spain's
economic recovery, while even rivals such as Santander
have publicly urged the state to consider an early sale.
Spain, which has 68 percent of Bankia, has been considering
selling a small part of its stake as soon as the first quarter
of 2014, Reuters reported last month, citing official and
"It's clear to me that there is appetite (for the stake),"
Chairman Jose Ignacio Goirigolzarri told a news conference after
the bank posted a 512 million euro profit for 2013.
The decision was down to the government but the bank had
held informal talks about such a sale, he said, describing these
as the first phase of an eventual privatisation that will be
done in chunks and could take around two years.
"It's important that this is done with the right timing ...
that it's done well and leaves a good taste," he said, adding
there was as yet no timetable or definitive plan for a sale.
Spain, which has until 2017 to fully privatise Bankia, is
keen to emulate Britain's partial sale of its stake in Lloyds
Banking Group Plc, official sources have said. The UK
sold 6 percent of Lloyds in September - five years after the
bank's rescue - and the bank said on Monday it was preparing for
a possible second sale.
Bankia's shares were up 1.6 percent at 1.3 euros by 1430
GMT. The stock, up more than 4 percent in the year to date, last
month briefly hit the 1.35 euro per share level at which the
government bail-out happened.
Goirigolzarri said it was "not impossible" to recoup all the
Bankia rescue funds. Spain, which has spent over 61 billion
euros propping up the financial sector since 2008 and plugged
22.5 billion euros into Bankia, has sold other nationalised
lenders at a loss.
The bank, the fourth-biggest in Spain, said international
investors held about 10.4 percent of its capital, up from 3.8
percent last May.
Still, some investors and investments bankers believe Spain
should wait a few more quarters for Bankia to show it can
sustain a recovery in revenue, as it completes a restructuring
that has so far seen it cut 5,400 jobs through selling off
businesses or closing offices and making redundancies.
Bankia posted higher-than-expected fourth-quarter net
interest income (NII) - or earnings from loans minus funding and
deposit costs - of 690 million euros, 7 percent better than in
the third quarter and topping an average forecast of 674 million
from analysts polled by Reuters.
The figures echoed improvements noted by peers after a fall
in deposit costs, and the momentum should continue in 2014 now
that Spain has exited recession and as lending picks up.
The BFA-Bankia group, including parent company BFA which has
sold down some stakes in companies, also beat its own
profit-after-tax goal of 800 million for the year by 18 million
But Bankia undershot quarterly profit forecasts after a
small spike in provisions against losses. It posted a 156
million euros profit after tax for the October-December period,
less than the 171 million expected by analysts.
Its bad debts as a percentage of total credit, meanwhile,
reached 14.7 percent at the end of December, above a November
sector average of 13.08 percent. The bank has already been
stripped of most its soured real estate loans and properties,
which were transferred into a government-backed "bad bank".
Yet some analysts said Bankia may struggle to keep up the
pace of its turnaround.
"Bankia's 2013 results included significant capital gains
and non-recurrent results ... which allowed the group to offset
provisions charges," Nomura analyst Daragh Quinn said in a note.
"But we continue to see limited upside for recurrent returns."