ANNOUNCEMENT 29 Jun 2010In June 2010, the government of Spain announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
EC press release
SA.34820 - Letter from the EC to Spain
SA.35253 - Letter from the EC to Spain
On 29 June 2010, Spain informed the Commission about its intention to support the bank 'Banco Financiero y Ahorro, S.A. (BFA). The Spanish government program FROB ('Fondo de Reestructuración Ordenada Bancaria') was to purchase EUR 4.46 billion in convertible preference shares of BFA. The purchase happened on 29 June 2010.
On 28 January 2011, BFA official took over the banking business of seven regional savings banks, namely: Caja Madrid, Bancaja, Caja Insular, Caja de Avila, Caja Laietana, Caja Segovia and Caja Rioja. (par. 7, letter from the EC to Spain, Brussels 27.6.2012) Later in April 2011, 95 per cent of the business was passed on to a subsidiary of BFA called Bankia.
Bankia is a universal bank, present in all major business segments: 'mortgage and consumer lending, SMEs, large corporations as well as public and private institutions'(par. 12) As of 31 December 2011, Bankia has total assets of EUR 306 billion.
Between February 2011 and May 2012, Bankia/BFA were subject to multiple capital injections:
On 18 February 2011, Spain introduced a reinforced solvency framework. As a result, Bankia requires additional EUR 5.775 billion of additional capital (only EUR 1.79 billion if it complies with a third party ownership maximum share of 20 per cent) (par. 10)
On 8 December 2011, the European Banking Authority (EBA) requested Bankia to build a temporary capital buffer to reach a 9 per cent Core tier 1 ratio by 30 June 2012. As a result, Bankia/BFA needs EUR 763 million in additional capital.
On 25 May 2012, Bankia presents its annual accounts and shows losses in 2011 of EUR 2.9 billion. The same day, BFA requested (from FROB) liquidity guarantees of EUR 19 billion (of which 12-14 billion for Bankia).
The EC states that: 'the intervening authority, the FROB, is directly financed through State resources. ' (par. 38)
The EC investigates the capital increases as well as the given guarantees. The EC concludes that: 'both measures are likely to affect trade between Member States because Bankia and BFA compete on the Spanish retail savings markets, the Spanish mortgage lending markets and the Spanish commercial lending markets.' (par. 44)
The EC also names potential affected countries by stating that: 'In all those markets, some of BFA and Bankia's competitors are subsidiaries and branches of foreign banks. In addition, the Commission considers that the banking sector operates internationally.' (par. 44)
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.