Spain has announced it has started the privatisation process for Bankia, which has been hit hard by the country's financial crisis.
The global crash hurt Spain harder than most major European economies and Bankia was one of the companies to particularly struggle as a result of the recession, as well as its after-effects.
In a bid to get the bank back on its feet, Spain's government has decided to sell off shares in the bank to private investors in order to improve its financial situation.
Bankia shares closed on Thursday at 1.58 euros (£1.29) each, resulting in a valuation of 1.36 billion euros for the stake in the bank.
Commenting on the move, Spain's economy minister Luis de Guindos said: "This is truly a sign of the shift in perception and of the reality of our financial system.”
Bankia's financial situation has been boosted in the last couple of years and its most recently released results, for the full year 2013, showed that it made more than 500 million euros. This is compared with the previous 12-month period, when the bank made a loss of 19.2 billion euros. This was the largest loss ever recorded by a corporation in Spain.
The offer of shares in Bankia was just 7.5 per cent of the organisation yesterday (February 27th), but it is expected it will be rolled out further in the coming months.
The Spanish government currently owns more than two-thirds (68 per cent) of Bankia after bailing it out in the middle of the global crash. However, Spain intends to sell no more than 18 per cent of the total stake in the company, as the government wants to retain control of Bankia for the time being.
Banks were also bailed out in the UK as a result of the recession. The UK government saved Royal Bank of Scotland (RBS) and Lloyds TSB, which have seen contrasting fortunes in the years since the move. RBS announced a loss of more than £8 billion for the full year 2013 earlier in the week, while Lloyds TSB returned to profit before splitting into Lloyds and TSB.
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