Bankia to Seek $500M for City National Bank of Florida: Report

Published December 17, 2012, 10:37 a.m. EST

Updated December 17, 2012, 10:00 a.m. EST

1 Min Read

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Bankia SA (BKIA), the largest Spanish bank due to receive a European bailout, plans to seek buyers for its Florida unit early next year in a sale that may fetch at least $500 million, people with knowledge of the matter said.

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Bankia has been interviewing U.S. investment bankers seeking to advise on the sale, said the people, who asked not to be named because the matter is private. Bankia may solicit interest from banks interested in expanding in Florida, including BB&T (BBT), PNC Financial Services Group (PNC), Toronto-Dominion Bank (TD) and BankUnited (BKU), one person said.

Bankia won approval from the European Union for a bailout after asking in May for help from the government to clean up bad loans. Selling City National Bank of Florida is part of the restructuring plan approved by the EU. Miami-based City National has 26 branches and more than $4.3 billion of assets.

A spokesman for Bankia, who asked not to be identified by name in line with the Valencia, Spain-based bank's policy, declined to comment. Representatives for the four banks declined to comment or didn't return a call seeking comment.

Bankia said on Nov. 28 it would sell City National under a restructuring plan that calls for the sale of nearly 50 billion euros ($65 billion) in assets through 2015. Separately, City National said that day that its parent had "a four-year window to evaluate alternatives" for the company. Bankia predecessor Caja Madrid bought 83%of City National in 2008 in a transaction that valued the bank at $1.1 billion.

City National's relatively low amount of problem loans and its profitability may attract suitors, the people with knowledge of the matter said. Its ratio of nonperforming assets to total assets was 0.95% in the third quarter and its return on assets was 1.15%, according to Federal Deposit Insurance Corp. data.

Bankia is Spain's No. 4 bank by assets. It said last month it would cut 6,000 jobs as part of a restructuring related to a planned 18 billion euro bailout.