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Madrid - Spain made a small profit on the sale of a 7.5% stake in Bankia as the government started to return the country's biggest bailed-out bank to private ownership and recoup taxpayers' money.
Bankia became a symbol of Spain's financial crisis after the huge losses it and other banks built up due to a property market collapse forced the government to take €41.3bn ($56.5bn) in European aid to rescue the weakest lenders.
The profitable stake sale is a boost for the government as it struggles to convince Spaniards that the costly cleanup of the banking system has been a success.
But Spain is still a long way from recouping the more than €22bn taxpayers injected into Bankia, a merger of seven failed regional savings banks.
Hundreds of thousands of ordinary Spaniards who bought Bankia shares when the bank joined the stock market in mid-2011 or held other securities, such as preference shares, lost most of their money in the rescue.
Bankia shares were sold at €1.51 each on Friday, the lender's parent company BFA said, 12% higher than the €1.35 the government bought them for last year, generating a €138m profit.
The sale was at a discount of around 4% to Bankia's closing price on Thursday
Demand topped €2.5bn, almost twice the amount on offer, with international institutional investors showing the biggest interest, the bank said.
A person familiar with the deal said the stake was mostly sold to investors based in Europe and the US
BlackRock, the world's largest money manager and funds T. Rowe Price International and Principal Global Investors have bought shares in Bankia in recent weeks.
BFA, owned by Spain's bank restructuring fund, will book capital gains of €301m on the sale, which totalled €1.3bn.
Based on Bankia's current market value, the state's remaining 60.9% stake is worth around €11bn.
"The fact that the state recoups part of the investment sends a very positive signal to the markets both on the economy and the Spanish financial sector," said Enrique Quemada, chief executive of OnetoOne investment bank.
"This is however an extraordinary case among Spanish banks which can't be extrapolated to the rest of the sector, which did not made such a profound cleanup," he said.
More sales?
Senior government sources have told Reuters the state could reduce its stake in several stages, with more sales possible later in the year, but would keep control of the bank until its restructuring, agreed with Europe, is completed.
Spain's economy ministry closely followed the successful sale by the British government of a 6% stake in part-nationalised Lloyds last September.
Another Lloyds share offering is set to take place in March or April, with possibly a small number of shares being offered to retail investors.
Spain has to exit Bankia by 2017 and the timing for any more sales will likely depend both on the share price as well as on the progress of its recovery plan.
OnetoOne's Quemada said he expects the shares to keep rising following a rally of more than 25% this year. The shares were down 4.6% to €1.509 in afternoon trading.
The bank is pushing ahead with its restructuring. It has shed more than 4 000 jobs, shut offices, transferred bad loans into Spain's bad bank and sold most of its portfolio of stakes in other companies.
Analysts are split on how Bankia may perform this year.
Some say it may be put under pressure by the European Central Bank's health checks, while others expect its net interest income will expand as the economy recovers, driving the shares higher.
Spain's bank restructuring fund hired Goldman Sachs earlier this month to design a strategy to sell its Bankia stake. Rothschild is advising BFA. UBS, Deutsche Bank and Morgan Stanley were bookrunners on Friday's sale.
