The Ministry of Economy and Competitiveness will promote the procedures for the conversion into capital of the preferred shares held by the Fund for Orderly Bank Restructuring (FROB) in the Financial and Savings Bank (BFA), as requested today by the board of the entity. The nominal value of these participations is 4,465 million euros, the disbursement of which was made on December 28, 2010. As a result of this conversion, the FROB will be the indirect owner of 45% of the capital of BANKIA; that is, it will acquire its control.

The conversion is based on the provisions of article 10.2 of Royal Decree-Law 9/2009, of June 26, on bank restructuring and strengthening of the own resources of credit institutions, as it is considered improbable, in view of the situation of the entity and its group, that the repurchase of the preferred shares can be carried out within a period of 5 years. Following the provisions of said provision, it is the responsibility of the FROB to formally request the conversion.

This decision will lead to the taking of public control and does not imply the intervention of the entity. The entry into the capital is considered a necessary first step to guarantee the solvency, the tranquility of the depositors and to dispel the doubts of the markets about the capital needs of the entity.

No creditor of the entity, including depositors and holders of preferred shares, will be affected by this decision. The new management team will be led by José Ignacio Goirigolzarri -who has a long and successful experience in the sector-, as the entity's board has decided today. The new team must present the Bank of Spain, for its approval, the plans for restructuring, viability and improvement of corporate governance.

The Government will provide the capital that is strictly necessary to carry out the necessary clean-ups in order to carry out said plans. With this, the Government is convinced that BANKIA will take advantage of its potential to continue playing a fundamental role in the Spanish banking sector.

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