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Bankia begins returning investments to minority shareholders who acquired shares during IPO

17 February 2016

Category: Corporate

  • Investors will quickly and easily recoup 100% of their investments plus compensatory interest with minimum fuss and at no cost, guaranteed
  • José Sevilla: “This process offers retail investors the opportunity to rapidly divest at no extra cost, also enabling Bankia to protect its assets, which ultimately belong to taxpayers”

Bankia has decided to offer any retail investors who acquired shares during the bank’s IPO in 2011 the opportunity to quickly and easily recoup their investments, without having to meet any other condition and at no cost and without recourse to legal proceedings or out-of-court settlements.

Bankia will fully refund minority shareholders their initial investment in exchange for returning their shares to the bank. If investors previously sold their shares, they will be refunded the difference between what they invested and the price at which they sold the shares. In both cases, compensatory interest of 1% per annum will be paid over the time elapsed until the investment was refunded.

Given current jurisprudence after the two appeals filed by Bankia were overturned by the Supreme Court, and without prejudice to the outcome of the case at the National High Court, the bank decided to devise a way for retail investors to quickly and easily recover their investments.

Bankia’s CEO, José Sevilla, explains that: “in light of recent events, we have taken the decision to allow minority shareholders participating in Bankia's IPO in 2011 to recoup all their investments plus interest”.

“We understand that this is a positive move for several reasons: firstly, it offers investors a quick exit as they can recover their funds within, we estimate, no more than 15 days from applying for a refund; and secondly, it saves money by avoiding further legal proceedings or bring the cases already being heard to an earlier close,” he continues.

“Thirdly, it protects Bankia’s assets, which ultimately belong to taxpayers, as it cuts the bill for interest by reducing the accrual period and, as mentioned, legal fees by opting for a fast, out-of-court solution,” the bank’s CEO adds.

How it will work

The process is straightforward. Investors just have to submit an application form in branch, which is available at their local branches. If shares were acquired and/or sold through another entity, investors must also provide a statement for their securities account showing any trades involving Bankia shares.

Retail investors may apply, even if they are involved in any legal or out-of-court proceedings to recover their investment from the bank.

If they have already filed a lawsuit, on recovering their investment, shareholders will be required to sign an agreement with the bank withdrawing their claim.

This will fully guarantee that all retail investors participating in the Bankia IPO will recoup 100% of their investment along with compensatory interest for the period elapsed. Funds will be recovered more quickly and the cost of and time spent on legal proceedings will be avoided or reduced.

Any retail investors involved in legal or out-of-court proceedings that decide not to accept this offer will have to continue with their claims, assuming the additional costs and time involved.

The application period begins tomorrow, 18 February, and will run for three months, which the bank considers to be enough time to process all cases.

Existing provisions

Bankia obtained funds from retail investors of 1.855 billion euros during the public offering in July 2011. Of this amount, 255 million euros was sold before March 2012, with shareholders incurring minimum losses or even making a gain.

In light of these figures and based on information available at this time, the BFA-Bankia Group considers that the provision of 1.84 billion euros set aside before the start of the process announced today will be sufficient to refund shareholders their investments plus interest, and will also cover any legal costs for lawsuits in progress, thereby avoiding or limiting any delays in processing claims for investors and the bank.

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