MADRID Jan 15 Spain could capitalise on foreign
investors playing its economic recovery to sell a chunk of
bailed-out Bankia now, fund managers said, though some
saw a more profitable disposal in a few months when the
country's turnaround gained traction.
Spain has stepped up contacts with bankers recently over
selling part of its 68.4 percent holding in the lender, raising
the idea of a small share offering as soon as the first quarter,
Reuters reported exclusively on Tuesday.
International funds have doubled their presence in Bankia's
capital in recent months, drawn by a share price rally and
improving results since the lender took part of a 41.3 billion
euro ($56 billion) European banking bailout.
"The interest from foreign investors in Bankia is obvious
... they're drawn by the Spanish restructuring story," said
Guillermo Aranda, managing director at Atlas Capital in Madrid,
which owns Bankia shares.
"If you add to this the increasing confidence and perception
that the economic situation is improving, one of the best ways
to participate in that as an investor is through Bankia, which
is centred on Spain, rather than through BBVA and Santander."
Santander and BBVA, Spain's two biggest
banks, make the bulk of their profit overseas.
Bankia became the focal point of Spain's financial crisis
when its toxic real estate investments pushed it to the brink of
collapse in 2012.
It is now turning into a symbol of an incipient economic
recovery after swinging back into the black in 2013, while Spain
exited a prolonged recession in the third quarter of last year.
The government has said it may yet review a 0.7 percent growth
forecast for 2014 on the upside as the turnaround takes root.
This optimism has helped Spain sell sovereign bonds at
increasingly lower rates, with yields recently hitting four-year
lows, and it raised more than it had targeted at the first
auction of the year.
Banks have also benefited from the rally, with Bankia
returning to international funding markets last week for the
first time since its rescue, raising twice as much as planned
with a 1 billion euro senior unsecured bond.
At an investor conference in Madrid on Wednesday, where
attendance was up 30 percent on 2013 according to organisers and
which drew around 250 funds, several foreign managers said they
might support a Bankia share offering, even if it happened now.
But they said there were also incentives for the state to
wait - because it may want to channel foreign capital into other
sectors to aid the economic upswing, and it would raise more
later as the share price rose further and the economy improved.
"It's in the state's interest to sell and return the
(European bailout) loan as soon as possible, but they don't want
to speculate with their position," said Antonio Hormigos, fund
manager in Spain at Mirabaud, which has about $27 billion of
assets under management and already owns Bankia shares.
"It's perhaps a little early (for a disposal) and what's
more it could sap the investment needed more in other sectors,"
he added, pointing as an example to the government-backed 'bad
bank' Sareb, which is selling off the soured real estate assets
taken out of rescued lenders like Bankia.
Bankia shares closed at 1.37 euros on Wednesday, slightly
above the 1.35 euros per share at which the state recapitalised
the bank with European funds in 2013. That means the state would
break even in a sale, although any share offering would have to
be done at a discount.
Spain spent 22.5 billion euros on rescuing Bankia.
"The government shouldn't be in a hurry and they will try
and make money with this sale to minimise the cost to
taxpayers," said Jose Lizan, fund manager at Auriga Global
Investors, who added he had sold Bankia shares in recent weeks.
He said Bankia's management had not yet had enough time to
fully turn the bank around.
Yet that has not put investors off from flocking to Bankia
in recent months, even though it will not pay dividends until
2015 and it trades at around 1.3 times its book value, according
to analyst estimates, above the average among Spanish banks.
BlackRock, Henderson and Amundi Asset
Management are among its top 10 investors, according to Thomson
The bank said international institutional investors owned
nearly 9 percent of the stock in early December compared to 4.4
percent in last June. Domestic institutional investors' holdings
had stayed flat at about 4 percent.
Meanwhile small retail investors who bought Bankia shares in
2011 when it was listed on the stock market, many of whom lost
money in Bankia's rescue, have been gradually selling out.
Some investors even said Bankia was the only Spanish banking
stock they would buy right now, because others were also
over-valued but didn't have the same turnaround potential.
"The state should make the most of this bullishness to get
rid of assets as soon as possible, as maybe in a month you'll
start getting bumps again," said a trader at an Italian bank,
who bought Bankia shares several months ago and believed the
state should start a sell-down now.
"It would be the best signal to send to other centres - that
the state is out of the banking system."