Bankia's president, Jose Ignacio Goirigolzarri, speaks during a press conference at the bank's headquarters in Madrid, Saturday, May 26, 2012. Spain's troubled bank, Bankia, has asked the Spanish government for 19 billion euro ($23.8 billion) in financial support just as a leading credit rating agency downgraded it to junk status. The request came as Standard & Poor's downgraded Bankia and four other Spanish banks to junk status because of uncertainty over restructuring and recapitalization plans. (AP Photo/Antonio Heredia)
Bankia's president, Jose Ignacio Goirigolzarri, speaks during a press conference at the bank's headquarters in Madrid, Saturday, May 26, 2012. Spain's troubled bank, Bankia, has asked the Spanish government for 19 billion euro ($23.8 billion) in financial support just as a leading credit rating agency downgraded it to junk status. The request came as Standard & Poor's downgraded Bankia and four other Spanish banks to junk status because of uncertainty over restructuring and recapitalization plans. (AP Photo/Antonio Heredia)
Bankia's president, Jose Ignacio Goirigolzarri, looks to his side during a press conference at the bank's headquarters , in Madrid, Saturday, May 26, 2012. Spain's troubled bank, Bankia, has asked the Spanish government for 19 billion euro ($23.8 billion) in financial support just as a leading credit rating agency downgraded it to junk status. The request came as Standard & Poor's downgraded Bankia and four other Spanish banks to junk status because of uncertainty over restructuring and recapitalization plans. (AP Photo/Antonio Heredia)
Bankia's president, Jose Ignacio Goirigolzarri, speaks during a press conference at the bank's headquarters in Madrid, Saturday, May 26, 2012. Spain's troubled bank, Bankia, has asked the Spanish government for 19 billion euro ($23.8 billion) in financial support just as a leading credit rating agency downgraded it to junk status. The request came as Standard & Poor's downgraded Bankia and four other Spanish banks to junk status because of uncertainty over restructuring and recapitalization plans. (AP Photo/Antonio Heredia)
MADRID (AP) ? The president of troubled Bankia tried Saturday to calm fears about the future of the bank, saying Spain's second largest mortgage lender will emerge as a solid financial entity after it receives ?19 billion ($23.8 billion) in state aid in the country's biggest ever bank bailout.
Bankia and its parent group BFA are prepared to sell a large portfolio of real estate and a "significant package" of companies as part of its efforts to turn itself around, Jose Ignacio Goirigolzarri told reporters.
The Spanish government has promised Bankia the money, an amount far higher than what it envisioned when it effectively nationalized the bank this month after it was stuck with some ?32 billion ($40 billion) in toxic assets derived mainly from the burst real estate bubble.
The government fears that the cost of rescuing the country's vulnerable banks could overwhelm its finances, which are strained by a double-dip recession and an unemployment rate of nearly 25 percent, and force it to seek a rescue by the rest of Europe ? already preoccupied by crisis-hit Greece.
Goirigolzarri outlined the bank's restructuring and recapitalization plans so far, which foresee beginning of the injection of state funds in late June. He said one of his priorities was to "strengthen corporate governance."
Detailed plans of the bank's restructuring would be made public in mid-June and would need to be approved by shareholders, he said.
In June, Bankia will have access to ?4.5 billion ($5.7 billion) requested on May 9 from the state bank rescue fund, FROB. This will be followed in July by the ?19 billion state recapitalization asked for on Friday, Goirigolzarri said.
Should Bankia be able to raise capital on its own by appealing to private investors and existing shareholders, then the government's share could be reduced, he said.
Goirigolzarri said his aim was to consolidate Bankia as a leading financial institution capable of operating with solvency, liquidity and profitability. "We are conscious that we will be managing an organization that has public participation," he said.
Concern about the health of Europe's banks is a key part of the region's financial crisis. Spanish banks are seen as particularly shaky because they were heavily exposed to soured investments such as defaulted mortgage loans and devalued property.
The big fear is that if Greece eventually leaves the euro, confidence in other financially weak countries like Spain and Italy could fall, causing the value of their bonds to drop. Ultimately, the worry is that it could undermine confidence in the system and create bank runs.
Bankia's request for recapitalization came as Standard & Poor's downgraded it and four other Spanish banks to junk status because of uncertainty over their restructuring. Such a move could make it more difficult for the banks to borrow the money the need to turn themselves around.
The bailout has angered a public suffering under the high jobless rate and relentless cuts. Alvaro Torres, 49, who owns a small fruit and vegetable market stall in Madrid, said that if there had been mismanagement in running the bank down, then those in charge should face a criminal investigation.
"If the bank needs to be helped out they should help it out, but first things first, those responsible should be held responsible," he said.
Goirigolzarri said his main immediate concern was to recapitalize Bankia, and he would later decide on how to begin issuing credit.
"We want to expand business, so expanding credit, that is in our interest," he said.
The bank's shares have become subject to turbulent trading. On Friday, Spain's stock market regulator suspended them as Goirigolzarri and his board of directors met to assess how much aid to ask for.
Associated Presslos angeles clippers los angeles clippers charlize theron telenav telenav wade phillips wade phillips
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.