Spain’s state-owned Bankia has so far paid out compensation of €358mn ($397.7mn) to minority shareholders who bought into its ill-fated listing, its chairman said yesterday, as it seeks to close a painful chapter and return to private hands.
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 nationalised through a €22.5bn ($25bn) bailout just a year after its listing.
After losing two appeals, Bankia and its parent holding BFA set aside €1.84bn to cover claims by small investors who held 60% 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 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% 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 €1.2bn 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.