Spain's Bankia eyes profit by 2013, to cut 6,000 jobs

MADRID Wed Nov 28, 2012 12:18pm GMT

Women walk outside the headquarters of Spain's lender bank Bankia in Madrid October 26, 2012. REUTERS/Sergio Perez

Women walk outside the headquarters of Spain's lender bank Bankia in Madrid October 26, 2012.

Credit: Reuters/Sergio Perez

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MADRID (Reuters) - Spanish bailed-out lender Bankia said it aims to return to profitability by next year after a restructuring plan that will cost about 6,000 jobs and see it shed 50 billion euros ($64.65 billion) of assets.

The European Commission on Wednesday approved restructuring plans for Spain's four nationalized banks that will lead to the injection of nearly 40 billion euros of euro zone bail-out funds aimed at ending a Spanish banking crisis that has brought the country to the brink of asking for sovereign aid.

"Our clients can be totally reassured because we have a viable and solid business in which they can be absolutely sure of their savings," said Chairman Jose Ignacio Goirigolzarri.

Bankia, which currently employs about 20,589 people, said hybrid debt holders would contribute up to 4.8 billion euros to its clean-up, through losses on their holdings incurred by swapping them for shares.

Many of these debt holders are small savers who say they were conned into buying complicated investment products instead of fixed-term savings accounts.

Shareholders will contribute 10.7 billion euros as part of its recapitalization plan, the bank said.

Bankia will cut its bank branches by 39 percent, and dispose of the 50 billion euros of assets via transfer to Spain's bad bank, the sale of industrial stakes and by cutting lending.

It is aiming for a net profit of 1.2 billion euros in 2015, and will scrap dividend payments until 2014. The bank said it forecast a 19 billion euro loss for 2012.

Bankia shares were suspended on Wednesday.

(Reporting by Sonya Dowsett; Writing by Sarah White; Editing by Julien Toyer and Mike Nesbit)