Troubled Spanish lender Bankia sells Mexican car financing arm

Spanish lender Bankia SA said on Thursday it had entered into a EUR9.7m (USD12.1m) deal to sell its car financing unit Finanmadrid Mexico to Mexican bank CI Banco.

Bankia is disposing of the Mexican business created in February 2005 as part of a strategy to get rid of non-core operations, it said.

The transaction needs to win the relevant regulatory approval before it can close, the vendor said, adding it expected to receive the nod in the next few weeks.

Finanmadrid Mexico, focused on loans for car purchases provided through concessionaire agencies, generated revenues of EUR7.3m last year, the highest result since it started operations driven by the strong car sector in the country.

CI Banco runs 137 branches across Mexico’s most important cities and tourism centres. The lender, established in 1984 and headed by Jorge Rangel de Alba Brunel, has assets of over EUR1bn.

Bankia, which asked for state help in May, has been granted a temporary clearance by the European Commission (EC) on Wednesday for its state bailout.

According to the EC, the aid would consist of a conversion of state-owned preference shares worth EUR4.465bn into equity and a liquidity guarantee of EUR19bn to the BFA group which comprises Bankia.

In a statement, EC competition commissioner Joaquin Almunia said that the Spanish bank’s parent BFA will become fully state owned, a move that would simplify decision making regarding its restructuring.