Bankia was in the eye of the financial hurricane in May 2012 when Spain's Frob fund had to pump 10.6 billion euros into the bank in order to bolster its capital reserves. This was not the only money that the Frob had to give to Bankia in order to keep it afloat. By the end, it had handed over 22.4 billion euros including the rest of public aid money that are in the BFA, which is the framework that the government is using to control 68.4% of Bankia.
José Ignacio Goirigolzarri has had to use the fund in hope of making Bankia profitable again, and it looks like he achieved his goal. The most convincing evidence that Bankia's recovery tale is believable is that the firm is selling debt on the open market. Yesterday it executed its most successful issue of senior debt in its history. Thanks to a thorough cleanup, not only has Bankia regained confidence, but it has taken advantage of favorable economic winds driven by a falling risk premium. So Goirigolzarri made good on his promise to pay back the money that he borrowed from taxpayers. For the rest of the year, Bankia's stock rose by and its share price ended at 1.35%.
This is the price per share that the Frob paid when it raised capital in May 2012. Still, Bankia will take another year to pay back the aid funding that it received and it is not certain whether it can ever pay back every last euro. Still, Bankia's Frob-funded recovery and its latest senior debt issue are clear signs that the medicine worked and that the bank is getting in position to returning to private ownership and returning some if not all of the money it borrowed from taxpayers.
