Bankia, Spain's third-largest lender, and smaller rival Banca Civica said Wednesday that they plan to hit the market with shares over the next three weeks, offering discounts of roughly 50% to their book value, a signal of their determination to push through their initial public offerings in a very sluggish market for IPOs.
Bankia said it plans to sell up to 907 million shares at a price of between EUR4.41 and EUR5.05 each, raising between EUR4 billion and EUR4.5 billion. It will sell 60% of the stock to retail investors in Spain, and the rest to Spanish and foreign institutional investors.
Civica, meanwhile, said it planned to sell 248.8 million shares and set a price range of EUR2.7-EUR3.8 a share, aiming to raise between EUR672 million and EUR945 million. It will sell half to retail investors and the rest to institutionals.
The lenders had already pushed back their listings by a week, in part to avoid having to price the shares at the same time as European stress tests are expected to come out, July 15. Managers at the two banks will now hit the road to try to woo investors in the main financial capitals of the world.
The two listings will test investor appetite for Spain's savings banks, which were shaken when Spain's massive housing bubble burst more than three years ago. As a result, lenders have had to digest billions of euros worth of soured loans and foreclosed properties.
Bankia folded the banking business of seven regional savings banks into a national banking giant with EUR275 billion in assets and a book value of just over EUR13 billion.
Civica is the result of the merger of four savings banks, and has EUR72 billion in assets.
Bankia said that if shares are sold at the mid-point of its initial price range, it will boost its core Tier 1 capital ratio to 10.1% from 7.63% now.
Civica said a successful placement would allow it to raise its capital ratio to 9.86% from 8.1% now.
Both have set aside billions of euros to cover souring loans and written down their most toxic real-estate loans and assets, in an attempt to make themselves more attractive for potential investors.
The fate of both listings are closely entwined with the outcome of the delicate situation in fellow euro-zone country Greece, which is scrambling to avoid having to default on its towering debt.
Fears of a bad ending in Greece have pushed up yields of Spanish bonds and pushed down the local stock market, with the banking sector among the worst performers.
All of Spain's listed banks currently trade at a discount to book value, in some cases above 40%. Banco Popular SA (POP.MC) and Banco Pastor SA (PAS.MC) show the highest discounts, while banking giants Banco Santander SA (STD) and Banco Bilbao Vizcaya Argentaria SA (BBVA) trade close to their accounting value.
- Both Bankia and Civica to offer big discounts to book value
-- Banks aim to raise a total of up to EUR5.5 billion
-- Deals are key step in overhaul of Spain's savings banks
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