The FROB did not divest from Bankia due to the merger and due to the impact of the pandemic on the sector’s valuation


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The Fund for Orderly Bank Restructuring (FROB) ruled out divesting from Bankia due to the merger process with CaixaBank, to the valuations of the banking sector affected by the pandemic of Covid-19 and due to the pressure of the low interest rate environment, as detailed in its 2020 Activities Report.

Specifically, it explains that during 2020 The market situation was “continuously” analyzed, also relying on the analysis of the investment banks that are part of a panel selected for this purpose and on the expert opinion of their advisor.

«The conclusion of this analysis has been that, since the entity was in the middle of an integration process in CaixaBankSince the market valuations of the banking sector have been affected by the pandemic and its effects on the economy and continue to be subjected to the pressure of the low interest rate environment, the appropriate conditions have not been given to proceed with a new operation of sale of titles, “he says in this regard.

Thus, the organization considers the merger between Bankia in 2020 as a ‘great milestone’, where the organization had a stake of more than 61% through the group BFA– Y CaixaBank. Currently, the Frob retains 16% of the capital stock of the new entity resulting from the operation.

Also, remember the appointment of Teresa Santero Quintillá as proprietary director of BFA on the board of directors of the merged bank.

Popular case

Likewise, the FROB includes the news in the European resolution on the ‘Popular case’. Specifically, remember that on March 18, 2020 the Single Resolution Board (JUR) adopted its final decision by which it concluded that Banco Popular’s shareholders and creditors “received no worse treatment” as a result of the entity’s resolution decision adopted by the JUR on June 7, 2017 than what they would have received if the entity had been liquidated in accordance with the ordinary Spanish bankruptcy procedure.

On this basis, the JUR also decided that the shareholders and creditors affected by the aforementioned resolution decision “were not entitled to compensation” by the Single Resolution Fund.

The FROB recalls, however, that the processing of the procedures through which the body’s resolution of June 7, 2017 is appealed is still pending, by which “the necessary measures were adopted to execute the decision of the SRB on the resolution of Banco Popular Español».

These appeals continue to be suspended pending a final resolution on the annulment appeals filed against the SRB’s decision and which depend on the General Court of the European Union (TGUE).

Valencia bench

On the other hand, it has reported that it had to pay CaixaBank 16.7 million euros before June 30, 2021 under the Asset Protection Scheme (EPA) of Bench Valencia, absorbed by the Catalan entity in 2012.

In the report, it explains that on November 27, 2012, the FROB granted a EPA to the buyer of Banco de Valencia, Caixabank, expiring on September 30, 2022, which covers 72.5% of the losses that may arise from a closed portfolio of assets that initially amounted to 6,424 million euros, with a first loss threshold of € 402 million. However, as a result of two reductions and a remediation of the perimeter carried out in April and August 2013 and in October 2016, respectively, these amounts rose to 5,192 million euros and 212 million euros, respectively.

The report informs that in the financial year 2020, net losses of 23 million euros have been settled. While the first loss threshold was consumed at the end of the 2017 financial year, these incurred losses mean that the FROB must pay Caixabank, in accordance with the ‘Protocol of Financial Support Measures within the framework of the Banco de Valencia Resolution Plan’, 16.7 million euros before June 30, 2021.

This amount is added to the 112.5 million euros that, as of December 31, 2020, the agency had paid to Caixabank by EPA warranty.

On the other hand, the report indicates that from the beginning of the EPA About 3.1 million euros have been received as an annual commission for the same.

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