Banks, Financial

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Economy

Eurozone inflation climbs to highest since April 2014

A welcome dose of good news before next week’s big European Central Bank meeting. Year on year inflation in the eurozone has climbed to its best rate since April 2014 this month, accelerating to 0.6 per cent from 0.5 per cent on the back of the rising cost of services and the fading effect of […]

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Financial

Wealth manager Brewin Dolphin hit by restructuring costs

Profits at wealth manager Brewin Dolphin were hit by restructuring costs as the company continued to shift its focus towards portfolio management. The FTSE 250 company reported pre-tax profits of £50.1m in the year to September 30, down 17.9 per cent from £61m the previous year. Finance director Andrew Westenberger said its 2015 figure was […]

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Financial

Travis Perkins and Polymetal to lose out in FTSE 100 reshuffle

Builders’ merchant Travis Perkins and mining company Polymetal face relegation from the FTSE 100 after their recent performances were hit by political events. The share price of Travis Perkins has dropped 29 per cent since the UK voted to leave the EU in June, as economic uncertainty has sparked concerns among some investors about the […]

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Banks

RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Categorized | Banks, Financial

Iberdrola files lawsuit against Bankia


Posted on May 31, 2016

©Bloomberg

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.