Notes on Bankia: a bailout called nationalisation

Last week’s government announcment of a partial nationalisation of Bankia, the country’s fourth largest bank, gained international attention due to the threat of a possible Spanish default.

- Bring Bankia’s officials to prison!

21/05/12 · 12:48
Edición impresa
JPG - 37.6 KB
Hundreds attended a rally in Madrid’s Puerta del Sol when Spanish bond yields reached a critical level of 507 points last wednesday. Photograph: Olmo Calvo

Editor’s note: Government announcement of a partial nationalisation of Bankia, the country’s fourth largest bank, gained international attention due to the threat of a possible Spanish default.

Spanish finance minister Luis de Guindos first announced on monday, may 21 that the bank would need an estimated €7’5bn to fix its troubled real state assets. Public spending cuts to meet european budget reduction demands will reach €27bn this year only. Update: On Friday, may 25 Spanish government recognized that Bankia will eventually receive a total €23’5 bn.

Social movements as 15-M and debt audit groups continue to reject Government funding of troubled banks as Bankia.


 
Notes on Bankia: a bailout called nationalisation

Juán Hernández Vigueras, Sinpermiso.info. Translation: Mario Lewis, AEIOU traductores.

“Between June and December 2010 the Banco Financiero y de Ahorros (BFA) [Financial and Savings Bank] was created as a result of the merger of Caja Madrid and Bancaja firstly and Caja Canarias, Rioja, Ávila, Segovia and Layetana afterwards, under the ad hoc legal system of the SIP (Institutional Protection System). This system, which integrates assets and liabilities in these banks, has been passed by the two majority parties to cover the disaster caused by property speculation and, by the way, the responsibilities of a disastrous bank management, at the expense of the taxpayer. In March 2011, nearly more than a year ago, Bankia was launched as a subsidiary company of BFA, a new private bank which contributed with 4,465 million € to the FROB, the national fund for bank rescue. The aim was to resolve the insolvency problems of Bancaja and others, especially Caja Madrid, “the one that has suffered the worst consequences of the brick crisis”.

“During the development of the new bank project of Madrid, the financial engineering assigned the so-called “toxic” assets (that is unpayable loans, houses and plots without a market) to the “bad bank”, the BFA; and the good assets with doubtful validity were assigned to the only subsidiary company, Bankia. This complex operation of accounting manipulation expected that future profit from Bankia could cover the insolvency of the parent bank, which, according to what is said, at present has zero capital. The rest came from financial accountability and their experts; The expression “toxic values”, launched in Wall Street to denominate the subprime assets when they lacked market and nobody knew what their value was, has been interestedly applied in Spain to avoid mentioning the properties with real physical existence but with an imaginary carrying amount as nobody knows their fair value on the market (mark to market); they are assets which are not being sold or bought neither now or in a long time.

Which precise accounting criteria were the starting points to separate in the accounts the good and the bad assets and establish their distribution between BFA and Bankia?"

Juan Hernández Vigueras is a Spanish author member of Attac Spain. The complete article was published in the website of the left wing magazine Sinpermiso. Read full text here (SPA)

On [this site->http://diagonalperiodico.net/-English-.html] we publish translated articles from DIAGONAL, a grassroots newspaper based in Madrid, and also from other sources. Our aim is to provide the tools to understand the political context in Spain and to build connections with the global anti-austerity movement.

Tags relacionados: Madrid Número 174 Bancos
+A Agrandar texto
+A Disminuir texto
Licencia

comentarios

0

Hundreds attended a rally in Madrid’s Puerta del Sol when Spanish bond yields reached a critical level of 507 points last wednesday. Photograph: Olmo Calvo
Hundreds attended a rally in Madrid’s Puerta del Sol when Spanish bond yields reached a critical level of 507 points last wednesday. Photograph: Olmo Calvo
separador

Tienda El Salto