http://globaleconomicanalysis.blogspot.com/2012/06/bankia-valued-at-eur-13635-billion.html
Thursday, June 28, 2012 2:34 AM
Bankia Valued at EUR -13.635 Billion; Spain Becomes Sole Owner, Shareholders Totally Wiped Out; Entire Bankia Board Resigns
Five days ago we heard from the Bank of Spain that Spanish banks only need between €16bn and €62bn in new capital.
For details, see Laugh of the Day: Stress Tests Show Spanish Banks Only Need Between €16bn and €62bn in New Capital; ECB to Accept BBB- Rated Debt (One Step Above Junk) as Collateral
In the same report we also heard that the three largest bank groups do not need any capital at all. Bear in mind that was allegedly in a "stress" scenario.
For details, see Laugh of the Day: Stress Tests Show Spanish Banks Only Need Between €16bn and €62bn in New Capital; ECB to Accept BBB- Rated Debt (One Step Above Junk) as Collateral
In the same report we also heard that the three largest bank groups do not need any capital at all. Bear in mind that was allegedly in a "stress" scenario.
Today we learned that Bankia is Valued at EUR -13.635 Billion
The seven banks that founded Bankia be left out of the shareholders of the entity and the State will be made with one hundred percent of the group's parent, Bank Savings Financial (BFA), the latter having a negative value of 13.635 million euros According to the assessment commissioned by the state.
After the assessment, the FROB becomes the sole owner of BFA.
Thus, the seven savings banks that created the group, Caja Madrid, Bancaja, La Caja de Canarias, Caja de Avila, Laietana Caixa, Caja Segovia and Caja Rioja, stay out of the shareholders.
Finally, BFA proceed to recapitalize its subsidiary, Bankia, with an injection of 12,000 million euros. He will do through a capital increase in which existing shareholders will have preferential subscription rights. It is expected that the capital increase in Bankia be completed during October.
The European Commission today gave its approval temporary nationalization and recapitalization of the matrix BFA waiting for Spain to send to Brussels a restructuring plan of the institution in the next six months.
I strongly suspect that a valuation of -13.635 billion euros is on the wildly optimistic side.
Entire Bankia Board Resigns
Here is an amusing picture from the El Pais article The assessment shows a group of Bankia 13.635 billion hole
El Pais reports ...
Looking back, Bankia has provided more laughs than I remembered.
May 7, 2012: Spain to Spend €7bn-€10bn (It Doesn't Have), Bailing Out Bankia, the Nation's 3rd Largest Bank; Liar, Liar Pants on Fire
May 9, 2012: Audit Shows Spain's Bankia Short 3.5 Billion Euros; PP says "We Must Help Bankia, It Has Deposits for 10% of GDP"
May 10, 2012: Spain Nationalizes BFA and 45% of Bankia; No Bid for CatalunyaCaixa, Bank Worth Less Than Zero; Der Spiegel: Germany Fears "Bottomless Pit"
Today we see that Bankia and the entire group is worth less than zero.
Entire Bankia Board Resigns
Here is an amusing picture from the El Pais article The assessment shows a group of Bankia 13.635 billion hole
El Pais reports ...
The group Bankia worthless. Worse, his assessment is negative, -13.635 billion euros. That is the appraisal on the face of nationalization has been presented today to the board of the entity, sources of such advice. That means that the conversion of the 4.465 million of preferred shares of Bank Savings Financial (BFA) results in 100% nationalization of the matrix and, indirectly, 45% of Bankia, but the assessment does not directly affect the bank quoted. The BFA board of directors resigned en bloc.
The seven savings banks that are BPA was created without any equity in the state, leaving them no future dividends to be used for social work . The entities concerned are Caja Madrid, Bancaja, La Caja de Canarias, Caja de Avila, Laietana Caixa, Caja Segovia and Caja Rioja. The seven contributed to its financial business BFA and are now nothing more than the assets of the work were marginalized social integration.Did they all retire with full pensions?
Looking back, Bankia has provided more laughs than I remembered.
May 7, 2012: Spain to Spend €7bn-€10bn (It Doesn't Have), Bailing Out Bankia, the Nation's 3rd Largest Bank; Liar, Liar Pants on Fire
May 9, 2012: Audit Shows Spain's Bankia Short 3.5 Billion Euros; PP says "We Must Help Bankia, It Has Deposits for 10% of GDP"
May 10, 2012: Spain Nationalizes BFA and 45% of Bankia; No Bid for CatalunyaCaixa, Bank Worth Less Than Zero; Der Spiegel: Germany Fears "Bottomless Pit"
The implosion in Spanish banks continues. On Wednesday, Spain nationalized BFA, the 8th nationalization since the start of the crisis.
After sinking 3 billion into CatalunyaCaixa, Spain tried to privatize the mess but there were no offers at zero euros. Clearly CatalunyaCaixa bank is worth less than zero.Emphasis added.Meanwhile Der Spiegel reports "Bundesbank has no idea of what is happening in Spanish banks". Mish readers do. The Spanish banking system is without a doubt bankrupt.
Today we see that Bankia and the entire group is worth less than zero.
and......
http://www.guardian.co.uk/business/2012/jun/28/eurozone-crisis-live-summit-brussels
The Irish finance minister just said that one of the main issues at the Brussels summit will be how to get Italian government bond yields to 4% or below - which seems rather specific. They are currently at 6.2%.
There are renewed rumours that Monti is about to resign as Italy's PM.
But these rumours have been around for a while.
Italy's borrowing costs have jumped to the highest levels since December at a €5.4bn auction of 5- and 10-year government bonds. Its Treasury got the bond sales away, but the 10-year yield leapt to 6.19% from 6.03% at the previous auction at the end of May. The 5-year yield rose to 5.84% from 5.66%.
Our man in Brussels, Ian Traynor, says the real story will be the eurozone lunch summit tomorrow after the main summit ends, when we get the Monti-Merkel clash over short-term market relief action. Monti wants some kind of automatic trigger on secondary market bond purchases when spreads go too wide, provided said country is not behaving badly. Doubt he'll get it, but...
Ian adds from Brussels:
Berlin stuck to a hard line on the euro this morning hours before chancellor Angela Merkel arrives in Brussels to fend off pleas for help from much of Europe. "All eyes are on Germany," she said yesterday.Briefing from Berlin, senior government officials dismissed concerns about the rising costs of borrowing for Spain and Italy as "exaggerated panic-mongering." They criticised a 10-year eurozone federation blueprint being discussed this evening as imbalanced, too much emphasis on pooling liability in the eurozone and not enough attention paid to fiscal discipline and democratic legitimacy.
There was scant sign of any concessions to Mario Monti, the Italian prime minister who is pleading for help in the bond markets to cut the cost of borrowing.The eurozone could only use the instruments already established, the bailout funds – European Stability Mechanism and European Financial Stability Facility – according to the rules and with the usual very tight strings attached – conditionality. You can't change the rules for each possible bailout every time something new happens, the Germans stressed.There was little sign of any breakthrough last night in Paris where Merkel had dinner with President Francois Hollande. One thing that was certainly discussed was when Hollande would get Merkel's fiscal pact ratified (the Germans do it tomorrow). Asked about this, a senior German said you will have to ask the French. Playing with a ratification delay may give Hollande a little leverage as Merkel is keen to get the pact up and running. Otherwise Hollande's armoury looks rather bare in the contest with Berlin.All the signs are that the Germans are absolutely in no mood for turning, but Brussels is awash with rumour that Merkel might turn a blind eye to a move by Mario Draghi (Italian) at the European Central Bank to intervene on the secondary markets to buy up Italian bonds. If this is to happen, it will be at lunch tomorrow following the end of the EU summit when Draghi joins eurozone leaders for a separate session. Tomorrow's lunch looks like being the crunch bit of the two-day summit.Italy's employers lobby group Confindustria has slashed its growth forecasts for this year and next, and once again warned that the economy - the eurozone's third largest - had fallen into an "abyss".The group now estimates the Italian economy will shrink by 2.4% this year, rather than the 1.6% decline forecast in December. Next year, it is set to contract by 0.3%, compared with a previous prediction of 0.6% growth.Luca Paolazzi, head of Confindustria's research unit, said:It seems to me we're in the abyss. We're not in a war, but the economic damage caused so far is equivalent to a conflict and the most vital and valuable parts of the Italian system have been hit: manufacturing industry and the young generations.Spanish 10-year government bond yields are back above 7%. And the Italian equivalent is also up, at 6.28%. Italy will be holding bond auctions again today, with the €3bn 10-year auction expected to receive special scrutiny.In a jab at the Italian and Spanish leaders who have warned their countries' rising borrowing costs are unsustainable, the German government source warns against "exaggerated panic mongering"over the surge in interest rates on Spanish and Italian government debt.More from the German government source, who expresses scepticism that a new instrument can be developed to tackle Italy's problems. The source reiterates that it's up to the governments themselves to decide whether, when and how to use the available instruments.Seeking to dampen pre-summit expectations, the source also says that "the question of progress towards a fiscal union cannot be resolved in one day". He reiterates Germany's opposition to using bailout funds to recapitalise banks while supervisory controls remain at the national level.A German government source is briefing journalists. Reuters reports him as saying that with the EFSF and ESM bailout funds, the EU already has all the necessary instruments at its disposal to deal with the crisis. The source also highlights the need to come up with precise, quick, appropriate help and a reform programme for Spain.Good morning and welcome back to our rolling coverage of the eurozone debt crisis and world economy. In Brussels, the long-awaitedtwo-day summit of European leaders begins at 2pm BST today. It will be preceded by a German chancellery background briefing at 8am, and pre-summit meetings by the EU socialist, conservative and liberal leaders, according to news service RAN Squawk.Italy's prime minister, Mario Monti, has warned of potential disaster if Europe's leaders don't club together and find a way to keep interest rates on Italy's debt down.If Italians lose hope, this could unleash "political forces which say 'let European integration, let the euro, let this or that large country go to hell', which would be a disaster for the whole of the European Union," Monti said.In another stark warning, his Spanish counterpart, Mariano Rajoy, reiterated yesterday that the EU must use all available instruments as "we can't fund ourselves at the prices we are paying for very long".Italian borrowing costs surged yesterday after German chancellor Angela Merkel once again ruled out jointly guaranteed eurozone debt. The yield on the 10-year government bond rose to 6.226% this morning, while the Spanish equivalent is once again approaching 7%, climbing to 6.961% this morning.
No comments:
Post a Comment