BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Banks, Financial

Iberdrola files lawsuit against Bankia

Posted on May 31, 2016


The Spanish utility Iberdrola has filed a lawsuit in Madrid against the state-owned Bankia over losses it suffered in the bank’s ill-fated initial public offering in 2011.

Iberdrola’s suit is seeking €12.4m in compensation for losses it suffered on its €70m investment. The utility confirmed that the lawsuit was filed last week. Bankia declined to comment on the suit.

    The filing comes as Bankia attempts to turn the page after its collapse and €22bn bailout in May 2012, less than a year after its controversial flotation, which came to symbolise Spain’s banking crisis and saw the fall of Rodrigo Rato, the former Spanish economy minister and later International Monetary Fund managing director who was chairman of Bankia during its IPO.

    The Spanish state owns 64 per cent of Bankia, which it has said it will privatise by the end of 2017.

    In February, after Spain’s Supreme Court upheld two lower court rulings on the basis that Bankia’s offering documents had contained “serious inaccuracies”, Bankia announced that it would compensate retail investors who had lost money in its IPO. So far, Bankia has paid out €1.2bn to retail investors and expects €400m more in claims, the lender said; the bank has set aside some €1.8bn in provisions for such claims.

    The February ruling was widely seen as differentiating between retail investors, who deserved compensation, and institutional investors, who had more ability to understand the risks of the IPO, said Daragh Quinn, European banks analyst at Keefe, Bruyette & Woods. At the time of Bankia’s bailout, institutional investors held about €600m in stock.

    As of February, 50 smaller institutional investors had sued Bankia for a total of €35m in loss compensation, but Bankia has received no notifications of new institutional lawsuits since then, until Iberdrola, said Bankia.

    Many of Spain’s large banks and companies — including insurer Mapfre, Banco Santander, Iberdrola, and Banco de Sabadell — invested in Bankia’s IPO, reportedly under pressure from the government to make the flotation a success.

    “At the time, there was significant government pressure on Spanish corporates to take action for the good of Spain. It was an important IPO and it was important for Spain that it did well,” says Mr Quinn. “What are Telefónica and Iberdrola and every other significant Spanish corporate doing taking part in a bank IPO? It’s not normal practice.”

    It is unclear whether Iberdrola will have much luck with its suit, or whether other large investors will follow. Santander chief executive José Antonio Álvarez and Banco de Sabadell chairman Josep Oliu have both ruled out trying to recover losses on their investments.

    For its part, Mapfre, which invested €280m in the IPO, pointed to an earlier statement by its chief executive, Antonio Huertas, who said: “Mapfre continues to analyse the situation and has not taken any decision to make legal demands given that, as we said at the time, we understand that the possibilities for success are scarce.”

    On a day when the IBEX 35 index was down 0.9 per cent in Madrid, Bankia fell 3.3 per cent to €0.78, while Iberdrola slid 1.2 per cent to €6.09.