Bankia's Record Loss Amid Spanish Recession
Bailed-out lender Bankia posted record losses for a Spanish firm as it was revealed the country's recession had deepened.
The loss figure, a staggering 19.2 billion euros (£16.6bn) for 2012, was just above the 18 billion euros the banking group was granted in rescue funds from Spain's eurozone partners last year.
Bankia, which was formed in 2010 by merging seven savings banks, was then one of Spain's top financial entities and heralded as the solution to the country's banking problems following the collapse of the once-booming real estate sector in 2008.
But it was nationalised in May last year amid its exposure to the burst housing bubble which plunged Spain into recession.
The results showed Bankia offloaded 19.5 billion euros' worth of bad property-linked assets during 2012 to a "bad bank" set up by Government to purge the toxic debt of Spain's banks.
Under the terms of the 18 billion euro bailout, Bankia was obliged to close branches and cut jobs.
While a third of its branches are to close, no official figure has been put on the job losses though unions estimate the total at 4,500.
The painful restructuring process for Spain's banking sector has contributed to a growing unemployment rate of 26% in the country's total workforce.
Youth unemployment stands at 55% and the outlook for growth remains uncertain as economists say there remains a real risk that Spain will need a sovereign bailout on top of its bank rescue.
GDP output contracted by 1.4% during 2012, official figures showed, as the economy shrank for the sixth straight quarter from October to December and at its fastest quarterly pace since mid-2009.
Spain's economy is expected to shrink in 2013 for a second year in a row as a result of its deep-rooted problems.
Although exports have jumped, retail sales have fallen for 30 straight months.
The European Union has signalled it wants Spain to lay out an ambitious plan of further structural reforms to the economy in order to bring down the public deficit, expected to miss Europe-imposed targets this year and next.