Holders of Bankia preferred stock and subordinated debt: let’s breathe!


VALENCIA| By Luis Torralba (Valencia Plaza) This new way of mediation still rises many questions about its articulation, procedures, who is going to lead it and, very important, how much Bankia will have to pay. Sources close to the organization headed by José Ignacio Goirigolzarri admit they are “waiting for it to be materialized to give instructions to their commercial network.”
Thus, for affected customers is still too soon to celebrate or to gather documentation to prove that there was ‘bad practice’ when they hired such products.

Managing partner of Strategia consulting Francisco Iniesta considers that “the Government should establish what is known as ‘institutional arbitration’, i.e. that it is a public institution which decides on cases that should be subjected to arbitration this matter.”
This expert quotes article 14 of law 60/2003 of arbitration, who goes even further by stating that “the National Commission for the securities market (CNMV) would be the most appropriate public institution to act as referee. “I understand that it is the more just and who counts with more media to be able to undertake this task,” he says.

Iniesta also reminds that “what is important is saving time and costs, and in accordance with article 43 of this law the arbitral award produces effects of res judicata, is binding on the parties and only fits against the nullification.”

5 billion euros According to Bankia sources, there would be some 5bn euros in preferred stock and subordinated debt. The clients of Caja Madrid monopolize most of the 3,1bn euros in preferred shares – in addition to a residual part via Caixa Laietana-; while some 1,9bn euros in subordinated bonds are mainly held by clients of Caja Madrid and Bancaja.

Clients of the extinct caja from Valencia have little subordinate debt because many attended the spring exchange. Bankia concentrated redemption of BFA preferred stock in Bancaja to the point that three of every four ‘victims’ came from the Valencia financial institution.

Still a long way to go The trade at a price of 3,314 euros is really far from the 0,695 euro-price of this week- very close to historic lows -. This means affected customers must endure until June 2013 to recover 100% of the nominal value. Today, the only consolation that remains to them -outside that the stock gets back on its feet – is that last June they received an additional 8.3% in shares, as will happen at end of this year, if they haven’t got it already -, and the same amount in June 2013. This is how the trade will work if the investment is maintained, which means in June of the coming year they will retrieve 100% of the nominal value.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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