Bankia’s IPO continues to wage war 10 years after it occurred. The Supreme Court, in a ruling of June 1, establishes that the entity must compensate the losses caused by the purchases of shares made after the IPO on July 20, 2011, not only for those acquired in the process of the public subscription offering (OPS). Of course, only ongoing claims will be dealt with, since the deadline for the legal battle has been prescribed.
Bankia has been, almost from the beginning, in favor of compensating small investors who bought shares on their IPO. Some 250,000 individuals attended the operation, mostly clients of the entity, and contributed 60% of the 3,092 million it raised in the capital increase.
Another different issue is the return of money to buyers in the secondary market, outside the subscription period of PAHO. Here, Bankia has been against indemnifying investors.
But the latest Supreme Court ruling agrees with the small investor. Four magistrates of the Civil Chamber have resolved that a retailer who bought directly in the market must be compensated, as they reason in a sentence, available in the online edition of CincoDías. However, there are other rulings that have exempted the entity from redeeming shares purchased in the secondary. One of them, also from the Supreme Court, dated June 2019.
The new ruling lists all the protective regulation for small investors, contained in the securities market law and in the European directive on prospectuses. And it concludes, contrary to what the Valencia Provincial Court ruled, that it recognizes “the liability for the brochure regarding purchases made in the secondary market in the 12 months after the approval of the Bankia OPS brochure.” This period is specifically stated in the market law, as well as the limitation period, set at three years and which, from the outset, closes the door to new claims being successful. Therefore, from the bank they rule out an effect on the accounts.
The Providential Hearing assures in its ruling that “the lack of the requirement of the nexus [en el folleto] of causality between the information provided by Bankia and the damage suffered by the plaintiff ”. It argues that it bought the shares on the market on May 23, when news was already known that anticipated the poor financial condition of Bankia.
But the Supreme Court does not buy this argument, stating that “the fact that, before the acquisition took place, there had been some events that caused the price to drop does not break the causal link between the faulty information contained in the brochure and the loss of value produced when the extent of these defects was known ”.
Bankia, in its 2020 annual report, explains that at the end of that year it had in force “164 civil proceedings regarding actions derived from PAHO and subsequent purchases”. “At present they continue to process, although in a reduced number, lawsuits requesting both the cancellation of the share purchases in the public subscription offering carried out in 2011 on the occasion of Bankia’s IPO, as well as those referring to subsequent purchases, although in relation to this last assumption they are residual claims ”, explains the bank.
The entity, in fact, concludes almost 100% of the claims episode, after Bankia itself opened an arbitration process at the beginning of 2016 to compensate individual investors; At the end of 2020, it had spent around 1,900 million euros in all processes. “The contingency associated with retail investors who subscribed shares in the OPS is considered practically resolved,” according to Bankia.
The amount that will potentially have to be returned will be reduced and, in any case, at the end of 2020 it had provisions of 196 million for “procedural issues and pending tax litigation.” Now it is CaixaBank that will be responsible for these issues, after its merger with Bankia. Sources of the entity indicate that at this moment there are still thirty legal proceedings for purchases of Bankia shares in the secondary after the OPS and that everything is sufficiently provisioned.