Bankia's Turbulent History and Future

Bankia was formed in 2010 through the merger of seven regional savings banks in Spain, including CajaSur, Caja Castilla-La Mancha, and Caja Madrid. This marked the beginning of a tumultuous period for the bank.

The bank's early years were marred by controversy, with allegations of corruption and mismanagement surfacing in 2012. The bank's CEO, Rodrigo Rato, was accused of embezzling funds and hiding losses. His departure led to a period of restructuring and cost-cutting measures.

Bankia's financial struggles continued, with the bank requiring a €22.5 billion bailout from the Spanish government in 2012. This was one of the largest banking bailouts in history, and it marked a turning point for the bank.

Bankia was formed on 3 December 2010, through the merger of seven Spanish savings banks. This merger, known as 'cold fusion', was completed in just four months.

The seven banks involved in the merger held the following shares: Caja Madrid had 52.06%, Bancaja had 37.70%, La Caja de Canarias had 2.45%, Caja de Ávila had 2.33%, Caixa Laietana had 2.11%, Caja Segovia had 2.01%, and Caja Rioja had 1.34%.

The merged bank, Bankia, was initially owned by Banco Financiero y de Ahorros (BFA), and the seven banks controlled BFA.

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Bankia was formed on 3 December 2010, as a result of the union of seven Spanish savings banks. The merger took only four months to complete, with the integration contract being signed on 30 July 2010.

Caja Madrid held a controlling interest in Bankia, owning 52.06% of the shares. Bancaja owned 37.70%, while the remaining shares were distributed among the other five banks.

Here's a breakdown of the share distribution among the seven banks:

Bankia initially owned the holding company Banco Financiero y de Ahorros (BFA), and the seven banks controlled BFA.

In 2017, Bankia was finally free from the restrictions of Brussels, which allowed it to compete on equal terms with other banks.

This newfound freedom gave Bankia the confidence to merge with BMN, the result of the union of Caja Murcia, Caja Granada, and Sa Nostra.

The merger with BMN was a significant move for Bankia, increasing its customer base by 25%.

Bankia's customer base expanded rapidly after the merger, setting the stage for its next phase of growth.

In 2018, Bankia embarked on its third and final stage, with a new strategic plan aimed at becoming the preferred bank in Spain.

Bankia's focus on becoming the preferred bank in Spain was not just a marketing slogan, but a serious goal that the bank was committed to achieving.

The bank's efforts paid off, with 2019 being its best year commercially to date.

Bankia's solid financial position allowed it to weather the economic storms of 2020, including the pandemic's impact on the economy.

In September, Bankia decided to negotiate a merger with CaixaBank, a move driven by Nadia Calviño, the vice president of Economic Affairs, representing the state's interests, and Isidro Fainé, the president of La Caixa Foundation and CaixaBank's largest shareholder.

The main reasons for the merger were to create a new entity with a sufficient size, capital level, profitability, and efficiency to tackle innovation and internationalization challenges.

The Bankia board of directors approved the integration with CaixaBank on September 17, 2020.

On December 1, 2020, Bankia's shareholders gave their approval for the operation and the creation of Spain's first financial group.

After receiving regulatory approval, the merger was completed, marking the end of Bankia's history, and paving the way for the technological integration of both entities, expected to be completed by the end of the year.

Bankia has faced its fair share of challenges and controversies.

The bank was ordered to reimburse two small investors for misleading them during its 2011 IPO, with the court citing "serious inaccuracies" in the prospectus.

Bankia is aware of lawsuit claims totalling €819 million and has set aside €1.84 billion in provisions for claims.

The bank made a significant offer to minority shareholders who participated in the IPO, promising to fully compensate them in exchange for returning their shares.

Bankia underwent significant restructuring between 2012 and 2017, imposed by the European Commission as a result of receiving state aid.

The bank had to reduce its branch network by 39% and workforce by 28%, and shareholders had to share the burden of the capital injection.

In 2013, Bankia returned to profitability, and the new management had to deal with controversies related to former management.

Bankia acquired Bankia Bolsa in 2013 and sold it to GVC, a Catalan entity, but failed to report the capital gains.

The entity was later renamed to Beka Finance, and Spain sold a 7.5% stake in Bankia in 2014 for €1.3 billion.

Bankia paid its first dividend in 2015, €0.0176 per share, and completed the sale of City National Bank of Florida to Chilean bank BCI for $883 million.

By the end of 2015, Bankia had fulfilled all the targets set by the European Commission two years ahead of schedule, and reported the best efficiency, solvency, and profitability among the six largest Spanish banks.

In 2017, Bankia agreed to acquire state-owned bank BMN for €825 million in an all-stock deal, and was listed in the CDP Climate Change report as one of the global companies leading the fight against climate change.

In 2016, the Spanish Supreme Court ordered Bankia to reimburse two small investors for misleading them during its 2011 IPO.

The court found that the prospectus for Bankia's public stock offering contained "serious inaccuracies".

Bankia is aware of lawsuit claims totalling €819 million and has set aside €1.84 billion in provisions for claims.

The bank made a surprising move on 17 February 2016 by announcing it would fully compensate minority shareholders who participated in the IPO.

These shareholders will receive 100% of their investment plus 1% compensatory interest per annum if they return their shares to the bank.

This offer saved Bankia €400 million in legal costs, a significant relief for the bank.

Bankia faced operational issues that hindered its digital transformation.

The bank's legal department struggled to adapt to new regulations quickly, which led to inefficiencies.

Bankia wanted a solution that would allow full traceability of its processes, enabling it to adapt to new regulations rapidly.

Bankia sold around €5 billion in complex financial products such as preference shares to customers.

These products suffered enforced writedowns, resulting in significant losses for the bank.

The bank began an arbitration process in 2013 to resolve the disputes with customers who held these products.

The time limit for submissions of applications for arbitration expired on 15 July 2016.

In 2017, 65 individuals were sentenced for misusing Bankia's credit cards, resulting in a total of €12.5 million in personal spending by executives and directors.

Rodrigo Rato, former president of Bankia and former IMF managing director, was sentenced to four and a half years in jail, while Miguel Blesa, former chairman of Caja Madrid, received a six-year sentence.

The fraud was uncovered after an article was published on eldiario.es, which was based on emails from Miguel Blesa.

In January 2022, Carlos San Juan de Laorden, a retired urologist from Valencia with Parkinson's disease, started an online petition for more human customer care at bank branches. He gathered over 600,000 signatures in just 2 months, highlighting the need for better service.

Many bank branches in Spain have closed in recent years, making it difficult for people to access human customer care. The number of bank branches shrunk to about 20,000 in 10 years since the bailout of 2012, and another 3,000 branches closed in less than 2 years due to the push for online banking.

The closure of bank branches has left many people, especially the oldest and most vulnerable members of society, without access to human customer care. This is particularly concerning, as some bank branches now only allow customers to be seen with appointments, but no appointments can be made by phone.

The lack of human customer care has significant implications for people who rely on in-person support. For example, a malfunctioning ATM in a bank branch may have a sign that says customers can only be seen with appointments, but no appointments can be made by phone.

Many organizations struggle with operational issues that hinder their growth and efficiency.

Bankia's legal department, for example, wanted to improve their digital transformation model.

Their goal was to have a solution that would allow full traceability of processes and adapt to new regulations quickly.

This would enable them to combine operational efficiency with information exploitation and end-to-end process visibility.

The desired outcome was to improve average operating times and efficiencies.

Bankia operates in several regions across Spain, including the Valencian Community, Castile and León, and Castile-La Mancha.

The Valencian Community is one of the bank's strongest markets, with a significant presence in cities like Valencia and Alicante.

Bankia has a substantial branch network in Castile and León, with a strong focus on serving local customers and businesses.

The bank also has a significant presence in Castile-La Mancha, with a large number of branches and a strong commitment to supporting the regional economy.