The Spanish state will likely continue with its privatization of state-owned Bankia SA following an inconclusive general election in the country, the bank's CEO said on April 29.
Spain went to the polls on April 28 for the third time in four years, and the ruling Spanish Socialist Workers' Party, or PSOE, won the election but did not gain enough seats to secure a majority in parliament and will need to form a coalition. One of its potential coalition partners is the left-wing Unidas Podemos, which has called for the state-owned Bankia to remain in government hands. The bank was bailed out for €22.4 billion in 2012 after posting a €19 billion loss.
CEO José Sevilla told journalists following publication of the bank's first quarter results that it was "reasonable" to believe that the incoming government would maintain its commitment to privatize the lender, adding that he hoped the privatization deadline of 2021 would be kept.
Sevilla, however, said that the sale would depend on market conditions, noting that the current environment was not that positive given low interest rates and the bank's low share price. In the last year, the lender's shares have underperformed the sector, falling 35.1% while the STOXX Europe 600 Banks Index has declined 16.3%.
Merger talk
Spain sold a 7% stake in the lender in December 2017, and there have been expectations that it would sell further small stakes on the market. There have also been reports of a potential tie-up with other Spanish lenders such as Banco de Sabadell SA or Banco Bilbao Vizcaya Argentaria SA.
"We are not expecting anything at the moment in terms of mergers, not with Sabadell or BBVA," Sevilla told reporters.
Later in a conference call with analysts, Sevilla said the lender and its management were "committed" to the government's goal of maximizing the value of its stake in order to return the state aid.
"We think it's in line with the interest of all our shareholders, taxpayers and the other shareholders," he said. "Any privatization scenario will always be conditioned to the strategy of doing whatever maximizes value for shareholders," he said.
Loan growth
Bankia posted a 10.5% drop in first quarter net profit to €205 million, hit by falling trading income, while net interest income fell 4.2% as the bank, like many of its European peers, continued to be hurt by the low interest rate environment.
The vibrant Spanish economy has showed signs of slowing down but Sevilla said he saw a strong economy going forward, with robust loan growth.
He said new mortgage lending grew by nearly 15% on the year to €728 million in the first quarter. Consumer lending was also showing rapid growth, he said, with new lending up 25.8% to €589 million.