Bankia sees investor appetite for sale of Spain's stake

By Sarah White and Jesús Aguado

MADRID (Reuters) - Spain's bailed-out Bankia has held informal talks with investors interested in buying part of the government's majority stake, the bank said on Monday.

Bankia, which returned to profit last year, became the symbol of Spain's financial crisis when it lost more than 19 billion euros ($26 billion) in 2012 and pushed the government to ask Europe for 41.3 billion euros in aid for ailing lenders.

Spain, which was landed with 68 percent of Bankia, has been considering selling a small part of its stake earlier than initially planned, and possibly in the first quarter of 2014, Reuters reported last month.

"It's clear to me that there is appetite (for the stake)," Chairman Jose Ignacio Goirigolzarri told a news conference after the bank posted a 512 million euro profit for 2013. There was however no definitive plan yet for such a sale, he said.

"It's important that this is done with the right timing ... that it's done well and leaves a good taste," he said.

Selling the entire stake would be done in phases and could take up to two years, Goirigolzarri said.

Some investors say that the state might get back more of the 22.5 billion euros it lent Bankia if it waited several months for the share price to rise further.

But Goirigolzarri confirmed that Spain's bank restructuring fund FROB, which manages the Bankia stake, would start looking for advisers this week to manage the sale.

Bankia's shares were up 1.9 percent at 1.3 euros per share by 1228 GMT. The stock, up more than 4 percent in the year to date, last month briefly hit the 1.35 euro per share level at which the government bail-out happened.

Goirigolzarri said it was "not impossible" to recoup all the Bankia rescue funds. Spain, which has spent over 61 billion euros propping up the financial sector since 2008, has sold other nationalised lenders at a loss.

Spain is keen to emulate Britain's partial sale of its stake in Lloyds , official sources have said. The government sold 6 percent of Lloyds in September - five years after the bank's rescue - and LLoyds said on Monday it was preparing for a possible second sale.

FOURTH QUARTER TURNAROUND

Bankia, Spain's No. 4 bank, showed its turnaround was advancing after posting better-than-expected fourth quarter lending revenue, setting it up for a stronger 2014.

Like bigger peers Santander , BBVA and Caixabank , it will be trying to ramp up recurring revenues this year.

Net interest income (NII), earnings from loans minus funding and deposit costs, fell 21.5 percent to 2.4 billion euros in 2013, but in the fourth quarter had reached 690 million euros, higher than analyst forecasts and 7 percent better than in the third quarter. The figures echoed improvements noted by peers after a fall in deposit costs.

However, Bankia undershot quarterly profit forecasts after a small spike in provisions against losses in the period as it stepped up a year-end clean-up effort. It posted a 156 million euros profit after tax for the October-December period, less than the 171 million euros expected by analysts.

And it still faces other challenges. Its bad debts as a percentage of total credit reached 14.7 percent at the end of December, above a November sector average of 13.08 percent.

But it has beaten targets on other fronts. The BFA-Bankia group, including parent company BFA which has sold down some stakes in companies, beat its own profit-after-tax goal of 800 million for the year by 18 million euros.

The bank has been stripped of most its soured real estate loans and foreclosed properties, which were transferred into a government-backed "bad bank".

(Additional reporting by Jesus Aguado; Editing by Fiona Ortiz and Louise Ireland)