March 15, 2016 / 2:52 PM / 3 years ago

Bankia shareholder compensation on track as it seeks new chapter

VALENCIA, Spain (Reuters) - Spain’s state-owned Bankia (BKIA.MC) has so far paid out compensation of 358 million euros ($397.7 million) to minority shareholders who bought into its ill-fated listing, its chairman said on Tuesday, as it seeks to close a painful chapter and return to private hands.

Shareholders protest before Bankia's annual shareholder meeting of Spain's largest nationalised bank in Valencia, Spain, March 15, 2016. The placards read "Adicae (Association of Bank Users), Against the preffered shares fraud". REUTERS/Heino Kalis

The compensation aims to help Bankia move ahead with restructuring after it became a symbol of Spain’s banking crisis in 2012 when it was nationalized through a 22.5-billion-euro ($25 billion) bailout just a year after its listing.

After losing two appeals, Bankia and its parent holding BFA set aside 1.84 billion euros to cover claims by small investors who held 60 percent of the bank’s shares and saw their investments almost wiped out after the flotation.

By March 11, Bankia had paid out compensation to cover 76,443 out of a total of around 125,000 claims, Chairman Jose Ignacio Goirigolzarri said during the annual shareholders meeting in the city of Valencia.

That works out at more than 4,600 euros per claim.

“These figures show two things: firstly the extraordinary rate with which shareholders have accepted our offer, and secondly Bankia’s ability to respond,” he told a subdued audience.

In previous years angry crowds of shareholders heckled bankers and scuffled with police outside the meeting in Valencia’s regional parliament building, but this year only a small vocal group remained.

Bankia’s compensation deal should also be extended to the 60,000 shareholders who claim they lost money after the bank mis-sold them complex financial instruments known as preference shares, said Javier Contreras, spokesman for the group that represents bank customers.

“I will be here every year so that you see me and never forget me,” one member shouted at Bankia’s directors before storming out of the room.


Bankia, which has steadily improved profits in the past three years, is entering a key phase for its return to private hands. Spain, which owns 64 percent of the bank, has vowed to sell off Bankia by the end of 2017.

But question marks remain about potential compensation for institutional shareholders who also bought into the listing for more than 1.2 billion euros and which Bankia has not provisioned yet. Goirigolzarri did not address the issue in his speech.

Looking forward, Goirigolzarri told reporters he did not expect the European Central Bank’s decision last week to further cut interest rates and expand asset purchases to cause much impact this year.

But he said that if the ECB maintained its policy, Spain’s banking sector could enter a period of consolidation in the next two or three years as record low rates squeezed banks’ margins.

Concerns that Spain’s political deadlock after an inconclusive election in December could damage the economy were overdone, he said, adding they paled in comparison to the effect of the slowdown in China or the price slump in raw materials.

Reporting By Angus Berwick; editing by Sonya Dowsett and Keith Weir

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