Bankia posts biggest loss in Spanish history

The Stock Exchange main display is reflected on a Bankia sign in Madrid, Monday, May 28, 2012. Shares in Spanish bank Bankia, one of the banks hardest hit by Spain's real estate collapse over the past four years, fell 28 per cent on opening in Madrid on Monday, the bank's first day back on the stock exchange following its announcement Friday that it would need Euro 19 billion ($23.8 billion) bailout to bolster its defenses.(AP Photo/Daniel Ochoa de Olza)
Daniel Ochoa de Olza

MADRID Bailed-out Bankia on Thursday posted a full-year net loss of 19.2 billion euro ($25.2 billion), the biggest ever suffered by a Spanish company, after the lender cleaned up its balance sheets of bad property loans and other risky investments.

The bank transferred loans worth some $22.3 billion to the new Spanish "bad-bank", which was set up to take on the banking sector's toxic assets. BFA, Bankia's parent company, set aside 26.8 billion euro in provisions. The group's overall net losses were 21.2 billion euro.

Spain's partners in the 17-strong group of European Union countries that use the euro granted Bankia an 18 billion euro bailout last year to strengthen its shaky balance sheet. The loan was part of a 100 billion euro credit line earmarked for Spain's banks so that the cost of rescuing them would not sink the Spanish government's finances and force it to demand a sovereign bailout.

Bankia S.A. was formed in 2010 by merging seven savings banks. Back then it was one of Spain's top financial entities and heralded as the solution to the country's banking problems following the collapse of the once-booming real estate sector in 2008.

The 2012 results were more than six times bigger than the 3 billion euro losses suffered in 2011. Just months prior to being nationalized last May, Bankia had been reporting 309 million euro in profits in 2011. Bankia lost 14.5 billion euro in deposits last year while its bad-loan ratio shot up to 13 percent from 7.6 percent in 2011.

The National Court is now investigating suspected mismanagement at Bankia by its former president -- ex-ruling Popular Party minister and ex-IMF chief Rodrigo Rato -- and 32 other one-time Bankia board members. Rato has not been charged with any crime.

The bank, which is to shed some 6,000 staff, said Thursday it hoped to return to profit in 2013.

The bank's shares, which have plummeted over the past few months, were flat at 0.3 euro in morning trading in Madrid.