Bankia SA : Arbitration process for hybrid instruments about to begin

• The Monitoring Committee set up by the Government today set out the criteria for going to arbitration.
• Submission of an arbitration application by a customer does not preclude court action.
• Customers may submit applications until 30 June.

The arbitration process for retail holders of hybrid instruments (preferred participating securities and subordinated debt) issued by the savings banks that merged to form the BFA-Bankia Group starts tomorrow.

The Bank will receive applications from customers and forward them to an independent expert, KPMG, which will be responsible for preparing a report assessing, in each case, based on criteria set by the Monitoring Committee, whether the application meets the requirements for acceptance in the arbitration process.

If a customer is informed that he or she does not meet the requirements, the option of taking the matter to the courts will remain open.

Cases that are accepted for arbitration will be referred to the National Consumer Arbitration Board. For each customer individually, the Board's arbitrators will decide for or against the claim and the amount payable in each case. The Board's decision is binding and non-appealable.

If the arbitration award is in the customer's favour, the customer will receive an amount equivalent to the nominal amount of his or her investment, less any interest received and plus any interest earned on a deposit.

The authorities have decided that all customers who invested in these products, whether or not they have exchanged them for shares, bonds or deposits, may submit an application. The arbitration process does not paralyse the planned exchange, due to take place in May pursuant to the resolution of the FROB Governing Committee regarding the management of hybrid instruments.

Bankia chairman José Ignacio Goirigolzarri stated: "We are very satisfied with the start of the arbitration process because it will allow a large proportion of small savers to recover their investment."

The director of Retail Banking at Bankia, Fernando Sobrini, declared: "Applying for arbitration does not close off any other option for making claims. Only if the independent expert says that the customer may go to arbitration and an arbitration agreement is signed will the option of court action be closed."

The period for acceptance of arbitration applications ends on 30 June. A specific section containing all the relevant information on the arbitration process has been made available on the Bankia website http://www.bankia.com.