http://www.zerohedge.com/news/moodys-downgrades-spanish-banking-sector-1-4-notches 06/25/2012 17:31 -0400 The long anticipated downgrade of the recently bailed out Spanish banking sector has arrived. Moody's just brought the hammer down on 28 Spanish banks http://www.zerohedge.com/sites/defa.../imageroot/2012/06/Spain downgrade matrix.jpg http://www.zerohedge.com/sites/defa...mageroot/2012/06/Moodys Spain Bank Excel .pdf Please click this link http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_143393 for the list of Affected Credit Ratings. This list is an integral part of this press release and identifies each affected issuer. For additional information on bank ratings, please refer to the webpage containing Moody's related announcements: http://www.moodys.com/bankratings2012. **** LT rating June 2012 Caixa Baa3 BankInter Ba1 Popular Espanol Ba1 Sabadell Ba1 Moody's cuts Bankia in Spanish bank downgrade http://www.businessweek.com/ap/2012-06-25/moodys-cuts-bankia-in-spanish-bank-downgrade Bankia Ba2
"Bankia Wins Initial EU Approval for Stock Conversion, Guarantee" http://www.bloomberg.com/news/2012-...-approval-for-stock-conversion-guarantee.html Crisis-hit Spanish lender Bankia SA (BKIA) won temporary approval from European Union competition regulators to convert 4.465 billion euros of preference shares in an attempt to boost the bankââ¬â¢s core capital. www.reuters.com/article/2012/06/28/markets-spain-factors-idUSL6E8HS14O20120628 Spain's fourth largest lender BFA-Bankia unveiled a 13.65 billion euro hole in its finances following a board meeting at which its directors agreed to step down, leaving just chairman Jose Ignacio Goirigolzarri at the helm. "UPDATE: EU Approves State Support For BFA Bankia " June 27, 2012, 7:21 a.m. ET http://online.wsj.com/article/BT-CO-20120627-704655.html --BFA and unit Bankia get EUR19 billion liquidity guarantee --Spain now has six months to come up with restructuring plan for Bankia --EU's Almunia says Bankia restructuring must be "deep" ********************************** http://www.bloomberg.com/quote/BKIA:SM Current shares outstanding 1,993.96 million shares or 1.993 billion shares current price is about 0.90 EUR market cap 1.866 billion EUR As mentioned earlier in this thread http://www.elitetrader.com/vb/showthread.php?s=&postid=3549625#post3549625 BKIA will also do a 12 billion EUR rights issue later in the year.
Mish has written a good summary about the demise of Bankia, although there are some points where he confuses BFA and Bankia. http://globaleconomicanalysis.blogspot.com.au/2012/06/bankia-valued-at-eur-13635-billion.html
Information about number of BKIA shares outstanding http://www.bankia.com/en/information-for-shareholders-and-investors/bankia-share/capital-stock 908 million pre-IPO 1.732 billion on IPO date 19 July 2011 1.993 billion on 2 April 2012 Press release regarding recapitalization of BFA-Bankia and Bankia: 25 May 2012 http://www.bankia.com/page/id-2-1304-0-99634-428435-99631-0.go Execution of the recapitalisation This past 9 May the BFA board of directors requested of the Fund for Orderly Bank Restructuring (FROB) the conversion into ordinary shares of convertible preferred securities of 4,465 million euros issued in December 2010. The conversion will be carried out with the utmost celerity. After the conversion, and upon completion of the stipulated procedures, the Spanish State will subscribe for a capital increase of 19,000 million euros in BFA in order to ensure compliance will all applicable Spanish and European regulatory requirements. It is expected that the conversion and capital increase in BFA will be completed during the month of June and give a controlling interest in BFA to the Spanish State, through the FROB. "BFA will then recapitalise its subsidiary, Bankia, with an injection of approximately 12,000 million euros. This recapitalisation will be carried out by means of a capital increase fully underwritten by BFA and with pre-emption rights for the current shareholders. It is anticipated that the Bankia capital increase will be completed during the month of October and give the Spanish State a controlling interest in Bankia, through BFA." "BFA is the parent company of Bankia with a 45% equity stake." "Bankia is a subsidiary of BFA and 55% of its capital is publicly traded since July 2011. " These two quotes reflect the figures above - that BFA owns 908 million of the 1.993 billion shares outstanding.
A very good article from Bloomberg about the recapitalization of Spanish banks: http://www.bloomberg.com/news/2012-...ing-bank-profit-risks-seeking-too-little.html Although there is discussion of Bankia's requirements, it does cover other banks. The implication is that there is potential for severe dilution for other banks such as POP.
SAN and BBVA look much stronger than other Spanish banks. In the case of SAN, there is international diversification. (May be true for BBVA as well). Then there are the benefits of being a larger institution - such as the ability to attract customer deposits that were previously kept at banks like Bankia. You can just ignore the above points and see from the charts that BKIA and POP have done much worse than SAN and BBVA.
draft terms of Spanish bank recap leaked: This FT Alphaville article in English: http://ftalphaville.ft.com/blog/2012/07/10/1078701/the-bail-in-spain/ links to this El Pais article in Spanish: http://economia.elpais.com/economia/2012/07/10/actualidad/1341932165_331354.html Which contains a link to the actual document in English (pdf file): http://ep00.epimg.net/descargables/2012/07/10/14540e59ee5504648623c2bb5da808b8.pdf might also be available at http://www.eleconomista.es/imag/_v3/ECONOMISTA/Documentos/MoU-Spain.pdf (Twitter search Spain MoU)
Peter Tchir and his analysis of the MoU document: http://www.zerohedge.com/news/spanish-financial-sector-mou-analysis
The draft MoU is set to be approved on Friday 20 July. Some analysis from the FT and the WSJ: "Spain pressed to inflict losses on small investors" http://www.ft.com/cms/s/0/c4810fd6-caa8-11e1-8872-00144feabdc0.html âBanks and their shareholders will take losses before state aid measures are granted and ensure loss absorption of equity and hybrid capital instruments to the full extent possible,â the document says. *** "Spain to Cede Bank Control: Draft of $123 Billion Bailout Deal Puts Bond-Loss Burden on Smaller Investors" http://online.wsj.com/article/SB10001424052702303567704577519091638685290.html?mod=googlenews_wsj