BASE PROSPECTUS FOR NON-EQUITY SECURITIES. MAXIMUM PRINCIPAL AMOUNT: 30,000,000,000 euros or its equivalent in any other currency

Transcription

1 BASE PROSPECTUS FOR NON-EQUITY SECURITIES MAXIMUM PRINCIPAL AMOUNT: 30,000,000,000 euros or its equivalent in any other currency This Base Prospectus for Non-Equity Securities was filed with the Comisión Nacional del Mercado de Valores (CNMV) on 19 July This Base Prospectus for Non-Equity Securities has been drafted in accordance with Annexes V, XII and XXII to Commission Regulation (EC) 809/2004, as amended by Commission Delegated Regulation (EU) No 486/2012 of 30 March 2012 and Commission Delegated Regulation (EU) No 862/2012 of 4 June 2012, and is supplemented by the Registration Document of Bankia, S.A., prepared in accordance with Annex I to the above Regulation and filed with the Comisión Nacional del Mercado de Valores ("CNMV") on 19 July 2016, which is incorporated herein by reference.

2 I. SUMMARY... 4 II. RISK FACTORS RELATING TO THE SECURITIES III. BASE PROSPECTUS OF FIXED INCOME AND STRUCTURED SECURITIES PERSONS RESPONSIBLE FOR THE INFORMATION RISK FACTORS KEY INFORMATION Interest of the natural and legal persons taking part in the issue Reasons for the issue and use of the proceeds INFORMATION RELATING TO THE SECURITIES TO BE OFFERED/ADMITTED TO TRADING Description of the type and class of the securities Legislation applicable to the securities Form of the securities Issue currency Ranking of the securities Description of the rights attached to the securities and procedure for the exercise of those rights Nominal interest rate and provisions relating to interest Maturity date and arrangements for redemption Indication of yield and method whereby it is calculated Representation of the security holders Resolutions, authorisations and approvals by virtue of which the securities are issued Issue date Restrictions on the free transferability of the securities Tax treatment of the securities TERMS AND CONDITIONS OF THE OFFER Offer conditions, statistics, calendar and subscription procedure Placement and allotment plan Pricing Placing and underwriting ADMISSION TO TRADING AND DEALING ARRANGEMENTS Application for admission to trading Regulated markets on which securities of the issuer of the same class as the securities to be offered are admitted to trading Liquidity providers ADDITIONAL INFORMATION Advisors connected with the issue Information in the Securities Note which has been audited /121

3 7.3 Information sourced from third parties Continued validity of information sourced from third parties Ratings SCHEDULE A. SUBORDINATED BONDS AND DEBENTURES AND SUBORDINATED BONDS AND DEBENTURES QUALIFYING AS TIER 2 CAPITAL SCHEDULE B. MORTGAGE COVERED BONDS SCHEDULE C. MORTGAGE BONDS SCHEDULE D. PUBLIC SECTOR COVERED BONDS SCHEDULE E. STRUCTURED SECURITIES ANNEX 1.- FORM OF FINAL TERMS ANNEX 2.- INFORMATION INCORPORATED BY REFERENCE /121

4 I. SUMMARY The items of information in this summary (the Summary ) are grouped in five sections (A to E), the subsections of which are numbered consecutively in accordance with the numbering stipulated in Annex XXII to Commission Regulation (EC) no. 809/2004 of 29 April 2004, implementing Directive 2003/71/EC of the European Parliament and Council of 4 November 2003 as regards the information contained in prospectuses and the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements. Any numbers omitted in this Summary refer to elements provided for in said Regulation for other prospectus forms. Any elements that are required for this prospectus form but that are not applicable on account of the nature of the transaction or of the issuer are marked Not applicable." SECTION A INTRODUCTION AND WARNINGS A.1 DISCLAIMER This Summary should be read as an introduction to the prospectus. Any decision made by the investor to invest in the securities should be based on consideration of the prospectus as a whole. Where a claim relating to the information contained in the prospectus is brought before a court, the plaintiff investor may, under the national legislation of the Member States, have to bear the costs of translating the prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary, including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus or if it does not provide, when read together with the other parts of the prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Disclosures about financial intermediaries Not applicable. The Company has not given its consent to the use of the prospectus for subsequent resale or final placement of securities by financial intermediaries. SECTION B ISSUER AND ANY GUARANTOR B.1 Legal and commercial name of the issuer B.2 Domicile and legal form of the issuer, the legislation under which the issuer operates and its country of incorporation B.3 Description of the issuer Bankia, S.A. (hereinafter, Bankia, the Bank or the Issuer ), and in commercial contexts Bankia. Bankia is a Spanish company. It is a commercial organisation, incorporated in the form of a public limited company (sociedad anónima), and has the status of a bank. Its shares are admitted to trading on the Spanish stock exchanges through the stock exchange interconnection system (Sistema de Interconexión Bursátil). Consequently, it is subject to the provisions of the Capital Companies Law (Ley de Sociedades de Capital), the Law on Structural Modifications of Business Corporations (Ley de Modificaciones Estructurales de las Sociedades Mercantiles) and other related laws, as well as to the specific legislation governing credit institutions and to the supervision, control and rules of the Bank of Spain. Since 4 November 2014 Bankia is under the supervision of the Single Supervisory Mechanism ( SSM ). As a credit institution is undergoing a restructuring it is subject to Law 11/2015, of 18 June, on the recovery and resolution of credit entities and investment firms ("Law 11/2015"), which partially repealed Law 9/2012 of 14 November on the restructuring and resolution of credit institutions ( Law 9/2012 ), and related legislation. Lastly, as a publicly traded company, it is subject to the Spanish Securities Market Law (Ley del Mercado de Valores) and its implementing regulations. Its registered office is at Calle Pintor Sorolla, no. 8, in Valencia, Spain and it holds taxpayer identification number (NIF) A Bankia s registered corporate objects include the pursuit of all types of activities, operations, acts, contracts and services which are proper to the banking business in general or which are directly or indirectly related to banking and which Bankia is permitted to carry on under applicable law, including the provision of investment and ancillary services and the performance of insurance agency activities. Bankia Group was formed from a merger process ended on 23 May 2011 between Caja de Ahorros y 4/121

5 Monte de Piedad de Madrid, Caja de Ahorros de Valencia, Castellón y Alicante, Caja Insular de Ahorros de Canarias, Caja de Ahorros y Monte de Piedad de Ávila, Caixa d Estalvis Laietana, Caja de Ahorros y Monte de Piedad de Segovia and Caja de Ahorros de La Rioja (collectively, the Cajas ). The merger process took place in two phases: (i) first, the seven Cajas involved in the integration spun off all of their banking and banking-related assets and liabilities to Banco Financiero y de Ahorros, S.A. ( BFA ) (the First Spinoff ) and (ii) BFA spun off to Bankia all of its banking business, the holdings associated with the financial business and the rest of the assets and liabilities that it received from the Cajas in the First Spinoff or received by any other means under the integration agreement, except for certain assets and liabilities that continued to be owned by Banco Financiero y de Ahorros. The main business segments are: Retail Banking, Business Banking and the Corporate Centre. Bankia has investments in other companies, although in accordance with the Restructuring Plan in Section B.4a of this Summary, it is currently immersed in non-strategic divestitures. Retail banking: comprises retail banking activities with individuals and companies (with annual revenue of less than 6 million euros), and is conducted through a large multi-channel network in Spain, with a focus on customer satisfaction and profitable management. Its objective is to attract and retain customers, providing them value through its products and services, advisory consultation, and quality attention. This is done by segmenting the customers based on the need for specialised attention and according to the needs of each type of customer. This segmentation, which classifies these customers into seven broad categories (Private Banking, Personal Banking, SMEs and Independent Contractors, Asset Management, Bankia Funds, Bankia Pensions and Bancassurance) allows Bankia to assign specific customers to specialised managers, who take overall responsibility for their relationship with the bank, thereby obtaining higher levels of customer satisfaction and generating new sources of business. Retail Banking is a strategic business for Bankia, with a market share in the households segment of 10.50% (10.73% Dec/14) in loans and 9.21% (9.45% Dec/14) in deposits (Source: Bankia Research Department and Bank of Spain, December 2015), as well as significant weight in investment funds, pension plans and private banking. Business banking: the Business Banking area serves companies with annual turnover of more than six million euros. This segment encompasses the entire bank's activity with businesses and institutional clients, and offers an extensive catalogue of products and services. Its business model is very specialised, and comprises a number of segments and distribution channels: business banking; corporate banking; and capital markets. On the lending front, Bankia continues to step up its activity, both in working capital loans and in credit facilities for investments. In 2015, the bank granted companies with revenues of more than 6 million euros a total of 10,526 million euros in loans, some 9.6% higher than the previous year. If to this figure we add the 3,221 million euros in loans to SMEs and 216 million euros in loans to independent contractors and self-employed professionals, the total credit extended amounts to 13,963 million euros, a full 16.6% more than the previous year. In addition, Bankia has made available to businesses, whether or not they are already customers, preauthorised credit totalling16,086 million euros for their short and long-term financing needs. Bankia supported businesses in their foreign trade activity with a total of 8,733 million euros, 20.9% more than in The bank managed to grow its active customer base by 19.8%. This growth was made possible thanks to the 13.4% increase import-export financing, which went from 5,428 million euros to 6,154 million euros, and to a 43.5% rise in international guarantees given, which reached 2,573 million euros, compared to the 1,793 million euros issued in The Group's strategy is based on a customer-focused distribution model, including resources specifically devoted to providing service to businesses. The aim of the SMEs Plan is to boost market share with small and medium enterprises by delivering better services and granting more loans. As a result, since the inception of the Plan in 2013 and through 31 December 2015 over 37,330 million euros in credit have been extended have been extended to companies, independent contractors and SMEs, with a target of 43,500 million euros. Taking into account that the Plan was rolled out at the end of 2012 and that the macroeconomic context has recorded worse-than-projected behaviour, the Plan can be considered to have met its target. Regarding investee companies, Bankia's portfolio of holdings in subsidiaries at 31 March 2016 included a total of 62 companies (33 of which were group companies, 2 jointly controlled entities and 27 associates) engaged in diverse sectors, including insurance, asset management, lending, services, and the development and management of property asses. At 31 March 2016, the balance of 5/121

6 the investment in associates and jointly controlled companies totalled 285 million euros (2014: 298 million euros). Bankia continues to move forward in its disinvestment of non-strategic assets in compliance with the commitments made in the Memorandum of Understanding (MoU). In this regard it is noted that the investees deemed strategic are in the Insurance Group, Bankia Fondos, Bankia Pensiones and Bankia Habitat. Bankia is mainly active in Spain, with a retail network of 1,887 offices and 44 business banking branches in Spain at 31 December To strengthen its competitive positioning, based on its relationship with customers, since 2013 Bankia has been promoting a new business model segmenting the network between different types of branches, including universal banking, business banking, private banking centres and 'agile' branches. The agile branches are a new type of office, pioneered by Bankia and a first in the Spanish financial system, which can provide a high-quality fast response to customers who carry out more transactions. The new agile branches are open longer hours, have high numbers of ATMs and quick service cashiers. At 30 June 2016 Bankia had 136 agile branches. Bankia has 1,941 retail customer branches, distributed in 100 Area Head Offices, which in turn report to 10 Regional Head Offices, with four large departments each: risk control, commercial management, agency network and recoveries. Bankia is segmenting its retail banking network into different types of offices to provide services ever more closely tailored to the needs of its customer base. In addition to the universal banking service offices, it has the so-called agile branches, outlying offices and Offices Plus +. The latter were opened in 2015 in the provinces of Madrid, Valencia and Castellón, with the aim of increasing to 180 in 2016 (in 2015 there 52 branches of this type). There are also recovery centres, settlement centres and offices for property developers. B.4 Most significant recent trends affecting the issuer and the industries in which it operates Macro-economic and sectorial environment An expansive global scenario is projected for 2016, similar to 2015, but with risks that have become much more visible in recent months. Of particular concern are financial turbulences in China, the vulnerability of stock markets, the possibility of the USA relapsing into recession, the management of the United Kingdom's departure from the EU (although the consequences will be more long term, Brexit is already generating uncertainty) and the difficulties of the European financial system in a context of negative interest rates, of great concern in Italy. For now, these risks appear to be contained, but they have roiled tensions in financial markets, especially in Europe, which, should they persist, could have very negative effects on the real economy. In so complex a scenario and with exceptionally low inflation rates, it is quite likely that the ECB will expand its asset-purchase programme and the Fed will put off rate hikes, at least, until the end of the year. The Spanish economy in 2015 consolidated the recovery begun in mid-2013, with Gross Domestic Product (GDP) posting its biggest gain in eight years (+3.2% vs +1.4% the previous year). This dynamism was driven by internal factors (cuts in personal income tax rates, improvements in competitiveness and borrowing terms, intense job creation) and external ones (ECB QE programme, falling petroleum prices, euro depreciation, reactivation of European economies); nevertheless, the impact of some of these drivers tapered off over the course of the year, with quarterly GDP growth slowing. The economy's engine was domestic demand, buoyed by stepped-up investment and, above all, higher household spending; this proved compatible with an expansion in financing capacity, thanks to the recovery in savings. The upswing will continue in 2016, albeit at a more moderate pace, due to cyclical momentum; consequently, for the year as a whole the European Commission is forecasting that GDP could grow by around 2.6%. In any case, the downside risks of this scenario are looming larger, due both to the external factors cited above and to internal ones: political uncertainty, fall in financial wealth of households, a possible halt to public sector belt-tightening and to the agenda of reforms, and lower potential growth rates. The growth of the domestic economy was reflected in the banking business, which continued recovering in terms of new lending and in asset quality. Nevertheless, margins are being squeezed ever more by very low interest rates and growing regulatory demands, compounded by uncertainty as to the fallout from Brexit in those financial institutions with larger direct exposure to the United Kingdom. In this context, banks have continued to shore up their financial positions, as evidenced by the results obtained in the most recent transparency exercised carried out by the European Banking Authority in November 2015, as well as by the highly successful fulfilment of the tier 1 capital requirements ( CET1 ) of the European supervisor as from 1 January 2016 under the annual supervisory review and evaluation process ( SREP ). 6/121

7 Compliance with the Restructuring Plan Pursuant to Law 9/2012, on 15 November 2012, the BFA-Bankia Group presented its Restructuring Plan to the Fund for Orderly Bank Restructuring (FROB) and the Bank of Spain, which was approved by the Bank of Spain and the European Commission on 27 and 28 November 2012, respectively. The BFA-Bankia Group must meet the commitments included in the Restructuring Plan, (information in this section refers to the BFA-Bankia Group as the Restructuring Plan is based on the BFA-Bankia Group consolidated scope) which are summarised below: (i) (ii) (iii) Reduce the scope of consolidation of the Bank by transferring assets to the state-organised asset management company SAREB (Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria), which took place in Focus the business on commercial banking. Bankia will centre its activity on being able to offer the bank s customers deposits, loans, current accounts, other money transfer services, credit lines, lease arrangements, credit card transactions, bancassurance products, asset management, private banking and investment services, trade finance, currency exchange and online or telephone banking, among other services. During the Restructuring Period the BFA-Bankia Group will not engage in the following activities: Loans related to real estate development. Financing of foreign companies outside Spain. Banking activities with companies that have access to the capital market, except for short-term activities such as working capital financing and short-term commercial and transactional banking services. In the course of applying the two foregoing points, in 2015 the BFA-Bankia Group fulfilled practically all of the commitments established in the Restructuring Plan and the Strategic Plan. In this regard, the most significant divestitures in 2015 and in 2016 up to the registration date of this document were as follows: Realia Business S.A.: In March 2015, Corporación Industrial Bankia (entity wholly owned by Bankia) signed a contract with Inmobiliaria Carso, S.A. de C.V. for sale of its entire interest in Realia Business, S.A. (24.953% of its share capital). The salepurchase was priced at 0.58 per share, for a total price of 44 million euros. The sale generated a capital gain of 9.6 million euros. Globalvía Infraestructuras S.A.: On 23 October 2015, Bankia and Fomento de Construction y Contratas, S.A. ( FCC ) signed a sale-purchase agreement with the funds USS, OPTrust and PGGM for sale of 100% of the shares of Globalvia Infraestructuras, S.A., a company owned by Bankia and FCC. The price of the sale-purchase involved an initial payment of 166 million euros, paid when the share transfer was formally executed, plus another deferred payment to be made in the first half of 2017, for a maximum of 254 million euros, depending on the company's valuation at the time the bond is converted. The sale-purchase agreement was executed on 17 March 2016 and had no impact on the Group's income statement. The holding had a net carrying value of 128 million euros. City National Bank of Florida: On 16 October 2015 the definitive sale of City National Bank of Florida was signed, through the transfer of 100% of the shares of CM Florida Holdings Inc. by the investee company Bankia Inversiones Financieras, S.A.U. to the Chilean Banco de Crédito e Inversiones, after clearance from the US Federal Reserve ( FED ) and payment of the agreed price. The sale brought in a net capital gain of 117 million euros for the Bankia Group. Valdemont Rentas, S.L.: The most significant transaction in the first quarter of 2016 was the sale of Valdemont Rentas, S.L., involving disposal of 50% of the rights, with an approximate loss for Bankia of 2 million euros. In addition, there were a number of sales of loan portfolios: Disinvestment of loan portfolios. In June 2016 doubtful and non-performing loans of 386 million euros were sold, of which 230 million euros were classified as doubtful and the rest as non-performing. In 2015, there were sold some 1,610 million euros in corporate loans in three transactions carried out directly in the secondary market between mediators and funds: A portfolio of 407 million euros, with collateral, on risk classified as doubtful in 7/121

8 (iv) (v) (vi) (vii) the hotel sector. A portfolio of 559 million euros with con real estate developer exposure, of which 434 million euros were considered highly doubtful. A portfolio of 645 million euros of industrial risk. Divestment of "granular" credit (loans of small amounts) reached 1,700 million euros, including 1,206 million euros with collateral, of which 1,001 million euros were considered doubtful and 205 million euros as highly doubtful. In all, the portfolios sold totalled a gross amount of approximately 3,310 million euros: 2,753 million euros were sold by Bankia (23% classified as highly doubtful) and 557 million euros by BFA (94% highly doubtful). In addition to these portfolios, the Group also divested itself of 515 million euros, mainly in respect of property developer loans. According to the financial projections in its Restructuring Plan the BFA-Bankia Group was committed to complying with the following economic figures and financial ratios at 31 December 2015: The net loan portfolio will be no greater than 116 billion euros. At 31 December 2015 the net loan portfolio amounted to 109 billion euros. In this regard, during 2015 the BFA-Bankia Group sold doubtful loan portfolios with a gross value of billion euros, in seven different deals. Risk-weighted assets will not exceed 93 billion euros according to the EBA criteria. At 31 December 2015 the risk-weighted assets per the aforesaid EBA criteria amounted to 75 billion euros. Total balance sheet assets will be no greater than 257 billion euros. At 31 December 2015 total balance sheet assets amounted to 214 billion euros. The loans-to-deposit ratio will not surpass 133%. At 31 December 2015 the ratio was 113%. At the same date, the ratio calculated as net lending divided by retail promissory notes, strict customer deposits, mediation-granted loans, and one-off nonmarketable mortgage-backed securities amounted to 103%. In 2015 the total number of branches will be 1,950. At 31 December 2015 there were a total of 1,931 branches (the number of branches in the retail network stood at 1,887), plus a delegation in Shanghai. The BFA-Bankia Group has thus also met the Restructuring Plan target of trimming the branch network (the target had nearly been reached at 31 December 2013). The majority of closures took place in non-strategic regions, thereby focusing mainly on the areas in which the Cajas de Ahorros that gave rise to Bankia originated. The headcount will be aligned with BFA-Bankia Group's new structure and new branch network: the targeted headcount for 2015 is 14,500 employees. There were 13,571 employees at 31 December If any of the aforesaid commitments contemplated in the Restructuring Plan are not fulfilled, the BFA-Bankia Group must offer corrective actions. The BFA-Bankia Group has also covenanted that the number of branches and employees will not increase after Regarding branches subject to the reduction plan which have been shut down or are currently in the process, as mentioned previously the BFA Bankia Group may not grant new financing to existing customers unless: It is necessary to preserve the value of the secured loan. It is granted to minimise capital loss or improve the expected recovery value of the loan. Mortgages in existence at offices pending closure at the date of the Restructuring Plan will be managed to maximise their value. In particular, the BFA-Bankia Group may restructure the mortgages that have been granted on the following terms: a) changing the conditions of the loan; b) transferring the mortgages to new properties; and c) transferring the real estate asset. Corporate governance measures: The BFA Bankia Group will not acquire new participations in or branches of business of other companies while the Restructuring Plan is in effect. Dividend payments by BFA-Bankia Group were restricted until 31 December 2014, when the restriction ended. Bankia's General Meeting of Shareholders of 22 April 2015 voted to pay a gross dividend of euros per share against 2014 profits. 8/121

9 Similarly, the Bankia General Meeting held on 15 March 2016 resolved to distribute a gross dividend of euros per share against 2015 profits. (viii) As regards actions carried out with hybrid instruments, the process took place in accordance with the resolution proposed by the FROB Governing Committee, based on the conditions set in the Memorandum of Understanding ("MOU") outlined by the European authorities within the scope of the program for assisting Spanish banks. (ix) Following BFA's loss of its banking licence the company (BFA) replaced all its ECB financing with alternative sources of financing including the repo deal with Bankia. This financing arrangement between BFA and Bankia is carried out on normal market terms, applying the usual cost for such transactions and the usual haircuts that markets apply to collateral provided and risks assumed by Bankia. The loss of BFA's banking licence has no impact on Bankia's solvency, legal form, business or Bankia's relationship with its customers. B.5 Group Bankia is the controlling company of the Bankia Group, which belongs to the consolidated group of credit institutions whose controlling company is BFA (the BFA-Bankia Group ). B.6 Major shareholders At 31 December 2016 the scope of consolidation included 62 companies, 33 of which were Group companies, 2 were jointly controlled companies, and the other 27 companies were associates) engaged in diverse activities, including insurance, asset management, lending, services, and the development and management of real estate assets. At 31 December 2015, there were a total of 36 companies classified as non-current assets held for sale. In 2015, the Bankia Group continued to move forward in divestment of non-productive and nonstrategic assets, in compliance with the commitments outlined in the Group's Restructuring Plan approved by the FROB and the European Commission. Bankia's controlling shareholder is BFA, an entity fully owned by the bank restructuring fund, the FROB (Fondo de Reestructuración Ordenada Bancaria). BFA owned 65.06% of Bankia's share capital at the preparation date of this document. Also, given below is a breakdown at the date of this document of the equity investments held by the Board of Directors and executives in Bankia: Direct Indirect Total Board Members No. of shares % of voting rights No. of shares % of voting rights No. of shares % of voting rights Mr. José Ignacio Goirigolzarri Tellaeche 1,036, % % 1,036, % Mr. Antonio Greño Hidalgo 65, % % 65, % Mr. Álvaro Rengifo Abbad 131, % % 131, % Ms. Eva Castillo Sanz 100, % % 100, % Mr. Fernando Fernández Méndez de Andés 65, % % 65, % Mr. Francisco Javier Campo García 201, % % 201, % Mr. Joaquín Ayuso García 220, % % 220, % Mr. Jorge Cosmen (*) 86 0,000% 121, % 121, % Menéndez-Castañedo Mr. José Luis Feito 197, % % 197, % 9/121

10 Higueruela Mr. José Sevilla Álvarez 220, % % 220, % Mr. Antonio Ortega Parra 300, % % 300, % Total 2,537, % 121, % 2,658, % (*) Jorge Cosmen owns his indirect interest in Bankia through the company QUINTORGE, S.L. (B ) B.7 Selected historical financial information There follows information on the key financial information at 31 December 2015 and 2014, based on audited accounting data, with unaudited restated data as at 31 December Attributable profit amounted to 1,040 million euros, an increase of 39.2% with respect to This main factors explaining this business performance in 2015 were: The resilience shown by the Group's net interest income despite extraordinarily low market interest rates. Continuation of a cost moderation policy after the conclusion of the Group's restructuring process, which has contributed to stabilising earnings in a complex environment for the banking industry. In this connection, the Bankia Group registered a year-end 2015 efficiency ratio of 43.6%, one of the best amongst Spain's biggest financial institutions. The risk management focus, which has translated into a sizeable reduction in loan loss provisions and in provisions and write-downs of property assets. Successful fulfilment of the Group's disinvestments plan, which culminated with the sale of City National Bank of Florida in October, buoying the generation of earnings in The capacity to generate profits, both organically and via disinvestments, has allowed the Group to continue boosting its margins, lifting ROE to 9% at the close of Also, during 2015 the Group allocated 424 million euros to strengthen the provisions set aside to cover the costs that could arise in the future from the various court cases associated with Bankia's 2011 initial public offering. Part of that provision (184 million euros) has been charged to the consolidated income statement, with the remaining 240 million euros charged against own funds on the balance sheet. Stripping out that provision, the Bankia ROE ratio would have reached 10.6%. On the business front, new lending by the Group to strategic segments such as businesses, SMEs and consumers continued growing. This rise in lending, together with a slowdown of deleveraging in the private sector in Spain, contributed to stabilising the volume of Group loans and receivables, which in 2015 recorded a decline of 1.9%, much smaller than the decrease in In addition, a large part of this drop in lending was concentrated in unproductive assets (doubtful loans), which has taken the NPL ratio down 2.3 percentage points from December of the previous year to 10.6%. The Group ended 2015 with total doubtful risks of 12,995 million euros (including loans and advances to customers and contingent liabilities), a full 3,551 million euros lower than the year-end 2014 figure. This reduction is explained by the decrease in new delinquencies, the risk in recoveries and the sale of loan portfolios, including 7 sales of doubtful loan portfolios that brought the balance of doubtful loans down by 1,885 million euros. The volume of customer funds under management continued trending upward, as regards both strict customer deposits and off-balance sheet funds, which recorded combined growth of 3,811 million euros, a rise of 3.3%, with respect to December This reflected a solid performance in capturing new deposits in the retail network and in the business banking network, as well as organic growth in assets managed, primarily in investment funds. In relation to disinvestments, the most important one was the sale of City National Bank of Florida, which reduced the Group's non-current assets held for sale by billion euros with respect to This sale generated an extraordinary profit of 201 million euros in In 2014, Bankia Group improved on its prior year profits with general increases in all profit items and prudent management of its balance sheet that resulted in a lower NPL rate (-1.8 percentage points to 12.9%) and improvements in both solvency and liquidity. Attributable profit was 747 million euros, a 340 million euro increase on These results were 10/121

11 driven by strong performances over the year not only in the core banking business net interest income and fee and commission income but also on operating costs, reducing the Group's reliance on less recurrent income sources such as Gains and losses on financial assets and liabilities and Gains on the sale of equity investments, which had contributed a greater proportion of the Bankia Group's 2013 profits. Another material factor was the lower volume of provisions and impairment losses taken as a result of the lower NPL rate and the balance sheet restructuring carried out in the two previous years. In the current low-interest rate environment, the resilience of recurrent income items, the healthy progress on costs and the return of provisions to more normal levels were key factors allowing the Group to significantly grow its attributable profit, by 83.3% compared to As regards loans, the Group's business generally was again affected by deleveraging in the private sector (households and companies) although the phenomenon was less marked than the previous year, as well as by the bank's strategy of focusing investment on the Group's strategic segments, cutting NPLs and continually strengthening solvency and liquidity. One positive factor to note was the slowing decline in loans to customers compared with prior years (-5.4% in 2014 vs % in 2013). This reflected an incipient rise in demand for finance in Spain, higher volumes of new loans granted by Bankia (mainly to SMEs, consumer credit and the self-employed) and a fall in doubtful assets driven by fewer new defaults and stronger recoveries and portfolio sales. Also noteworthy was the strong growth of strict customer deposits (+5.4% on the year) thanks to healthy deposit capture despite the major downsizing of branch numbers by the Group in Finally, in 2014 the Group's portfolio of available-for-sale financial assets was reduced by 5,932 million euros (-14.6%) as a result of debt maturing during the year, while non-current assets held for sale fell by 4,437 million euros (-37.0%) due to the sale of equity investments and the deconsolidation of Aseval assets following the sale of 51% of the company to Mapfre in October In 2013 the Bankia Group returned to profitability, after completion in 2012 of the process of cleaning up its balance sheet as provided for in the Restructuring Plan, which required a strong provisioning and write-off effort. Despite the difficult economic environment affecting the core banking business (net interest income and fee and commission income) in 2013 the Group managed to cut operating costs significantly, improving the cost-income ratio and sustaining Pre-provision profit at close to 2012 levels. Thanks to these improved parameters, Bankia Group made attributable profit of 408 million euros in 2013 following a loss in 2012, which means the process of generating the value envisaged in its Restructuring and Strategic Plans is now underway. As mentioned previously, the environment in which the Group carried out its activities in 2013 was challenging for banks, with low volumes, scant demand for credit and a weak economy. Against this backdrop, the Bankia Group carefully followed the road map marked out in the Restructuring Plan, moving forward in its deleveraging process while bolstering its solvency and liquidity. Thus, it reached its key target in 2013: completion of the recapitalisation process during the period with two capital increases in May, enabling it to end the year with own funds of 10,657 million euros. At year-end 2013, the Group's total assets amounted to 251,569 million euros, down 10.9% on 2012, with a business volume (comprised of loans and advances to customers, customer deposits, debt securities, subordinated liabilities and off-balance sheet items, which includes investment funds, pension funds, and savings insurance) amounting to 276,631 million euros, down 11.5% from 2012 due to decreased credit, cancellation of the Group's subordinated liabilities arising from the capital increases taking place in May, as well as the maturity of wholesale debt. Part of the volume decline during the year reflected a fall in the market value of trading derivatives due to the portfolio's rate sensitivity as long-term curves suffered significant margin rises in Off-balance sheet amounts rose 6,239 million euros in 2013, excluding discretionary portfolio management. This notable upward trend permitted the BFA Bankia Group to compensate for the drop in retail deposits which was mainly due to accelerated process of shutting down branch offices as stipulated in the Restructuring Plan. Selected financial information from the Bankia Group s consolidated income statement Income statement (figures in millions of euros) 31/03/ /12/ /12/ /12/2013 (1) Chg. (%) 2015 / /121

12 Net interest income (%) 577 2,740 2,927 2,425 (6.4%) Gross income 853 3,806 4,009 3,482 (5.1%) Pre-provision profit 454 2,148 2,267 1,577 (5.2%) Operating profit/(loss) 338 1,413 1, % Profit/(loss) before tax 315 1, % Consolidated profit/(loss) for the year 237 1, % Profit/(loss) attributed to the parent company 237 1, % (1) Shown for comparative purposes only. Figures have been restated as explained in note 1.5 to the 2014 consolidated financial statements to retrospectively reflect the impact of early adoption of IFRIC 21. Selected financial information from the Bankia Group s consolidated balance sheet Assets (figures in millions of euros) 31/03/ /12/ /12/ /12/2013 (1) Chg. (%) 2015 / 2014 Cash and deposits at central banks 1,197 2,979 2,927 3, % Financial assets held for trading 13,288 12,202 18,606 22,244 (34.4%) Of which: loans and advances to customers Available-for-sale financial assets 29,496 31,089 34,772 40,704 (10.6%) Loans and advances 116, , , ,918 (6.0%) Of which: loans and advances to customers 109, , , ,116 (1.9%) Held-to-maturity investments 24,997 23,701 26,661 26,980 (11.1%) Hedging derivatives 4,391 4,073 5,539 4,260 (26.5%) Non-current assets held for sale 2,770 2,962 7,563 12,000 (60.8%) Equity investments (4.3%) Tangible and intangible assets 2,252 2,261 2,058 2, % Other assets 9,437 9,642 9,997 9,858 (3.6%) TOTAL ASSETS 204, , , ,569 (11.4%) Liabilities (figures in millions of euros) 31/03/ /12/ /12/ /12/2013 (1) Chg. (%) 2015/2014 Financial liabilities held for trading Financial liabilities at amortised cost 13, ,431 12,408 18,124 20,218 (31.5%) 176, , ,033 (8.7%) Of which: customer deposits 106, , , , % Hedging derivatives Liabilities under insurance contracts Provisions Other liabilities 1,025-2,204 1, ,490 1,897 (60.7%) ,898 1,706 1, % 1,714 5,714 8,117 (70.0%) 12/121

13 TOTAL LIABILITIES 191, , , ,209 (12.1%) Equity (figures in millions of euros) 31/03/ /12/ /12/ /12/2013 (1) Chg. (%) 2015 / 2014 Own funds 11,859 11,934 11,331 10, % Valuation adjustments , (42.8%) Non-controlling interests (13) (40) - TOTAL EQUITY 12,561 12,696 12,533 11, % TOTAL LIABILITIES AND EQUITY 204, , , ,569 (11.4%) (1) For comparison purposes only, the 31 December 2013 figures show the restated data that were included in the 2014 consolidated financial statements to retroactively reflect the impact of early adoption of IFRIC 21. Business volume Business volume (figures in millions of euros) 31/03/ /12/ /12/ /12/2013 Chg. (%) 2015 / 2014 Net loans and advances to customers (1) 109, , , ,119 (1.9%) Customer deposits Marketable debt securities Subordinated liabilities 106,069 24,402 1, , , , % 22,881 23,350 28,139 (2.0%) 1,046 1, % Customer assets managed off-balance sheet (2) 22,784 22,773 21,042 20, % TOTAL REVENUE 263,612 (1) Includes loans to customers and the trading portfolio. (2) Investment funds and companies, pension funds and bancassurance savings policies. Main solvency indicators 265, , , % The table below shows Bankia Group's main Basel III solvency ratios for 2015, 2014 and, for comparison purposes, the estimates for year-end 2013: Solvency (%) 31/03/ /12/ /12/ /12/2013 (2) Chg. (p.p.) 2015 / 2014 BIS III (CRR and CRD IV) Ordinary Tier I Capital Ratio - BIS III Phase In (1) 11, % 12.3% 10.4% p.p. Tier I Capital Ratio - BIS III Phase In (1) 14.1% 13.9% 12.3% 10.4% p.p. Total Capital Ratio - BIS III Phase In (1) 15.4% 15.1% 13.8% 10.8% p.p. (1) Solvency ratios include profit/(loss) attributable to the Group and discount the regulatory adjustment for the future dividend. At 31/03/2016 they discount the proportional part of the dividends distributed against 2015 earnings (302 million euros), i.e., 75.5 million euros. Minimum requirements applicable to the Bankia Group: 13/121

14 - At 31 December 2015: Common equity tier 1 capital (CET1): 10.25% (includes Pillar I, Pillar II and capital conservation buffer) - At 31 December 2014: Common equity tier 1 capital (CET1): 4.5% and Total Capital: 8% (includes Pillar I). - At 31 December 2013 there was no regulatory minimum associated with BIS III, as these rules came into effect on 1 January Risk management Risk management Chg. (figures in millions of euros and %) 31/03/ /12/ /12/ /12/2013 (% & p.p.) 2015 / 2014 Total risks (1) 121,499 NPLs (2) 12, , , ,660 (4.4%) 12,995 16,547 20,022 (21.5%) Loan loss provisions 7,601 7,794 9,527 11,312 (18.2%) Delinquency ratio (%) (2) 10.3% Coverage ratio (%) (3) 60.5% 10.6% 12.9% 14.7% (p.p. 60.0% 57.6% 56.5% p.p. (1) Includes loans and advances to customers and contingent liabilities (2) NPLs/ Total risks at 31 December 2015 the ratio includes the balances with BFA as part of total risks. In January 2015 those balances were reclassified from deposits in credit institutions to loans and advances to customers as a result of the change in the sector classification of BFA. If the balances with BFA are excluded from total risks, the delinquency ratio would be 10.8% at the end of December 2015, a more comparable ratio with those recorded in the two preceding years. (3) Loan loss provisions / NPLs Profitability and efficiency Profitability and efficiency (figures in millions of euros and %) 31/03/ /12/ /12/ /12/2013 (1) Chg. (% & p.p.) 2015 / 2014 Average total assets (2) 205, , , ,666 (10.6%) Average own funds (3) 11,652 11,537 11,256 10, % Gross income 853 3,806 4,009 3,482 (5.1%) Administrative expenses 362 1,511 1,586 1,729 (4.7%) Amortisation and depreciation (5.8%) Consolidated profit/(loss) for the year Attributable profit/(loss) for the year 237 1, % 237 1, % ROA (%) (4) 0.5% 0.5% 0.3% 0.2% p.p. ROE (%) (5) 8.2% 9.0% 6.6% 3.8% p.p. Efficiency ratio (%) (6) 46.8% 43.6% 43.5% 54.7% p.p. (1) 2013 figures are restated figures from the 2013 consolidated financial statements (2) Average monthly closing balances of total assets. (3) Average monthly closing balances of own funds. (4) Consolidated profit/(loss) for the year / Average total assets. (5) Profit/(loss) attributed to parent company / Average own funds. In 2013 own funds at year-end is used because it was negative until the capitalisation in May. (6) (Administrative expenses + depreciation and amortisation) / Gross income Share information 14/121

15 Share information 31/03/ /12/ /12/ /12/2013 (1) Chg / 2014 Number of shareholders (1) 354, , , ,683 (4.7%) Number of shares (million) 11,517 11,517 11,517 11,517 - Price at end of year (euros) (13.2%) Market capitalisation (million euros) 9,559 12,370 14,258 14,212 (13.2%) Earnings per share (euros) (2) 28.6% (1) According to register of shareholders (2) 2013 data are subsequent to capitalisation process in May that year, and thus are not comparable to 2012 (3) December 2013 EPS are calculated as restated attributed result divided by the weighted average number of shares after the reverse split held in May 2013 on shares outstanding at 1 January In accordance with the guidelines on Alternative Performance Measures ( APM ) contained in the report issued by the European Securities and Markets Authority (ESMA) on 5 October 2015, and which took effect on 3 July 2016, broken down below are the unaudited alternative performance measures: Bankia Group annual information: Bankia Group alternative performance measures (figures in millions of euros and %) Chg. (% & 31/12/ /12/ /12/2013 (1) p.p.) 2015 / 2014 Pre-provision profit (2) 2,148 2,267 1,577 (5.2%) Average total assets (3) 222, , ,666 (10.6%) Average own funds (4) 11,537 11,256 10, % ROA (%) (5) 0.5% 0.3% 0.2% p.p. ROE (%) (6) 9.0% 6.6% 3.8% p.p. Efficiency ratio (%) (7) 43.6% 43.5% 54.7% p.p. Customer margin (8) 1.51% 1.31% 0.93% p.p. Average return on assets (9) 1.65% 1.88% 2.00% (p.p.) LTD ratio (%) (10) 101.9% 105.5% 115.4% (p.p.) (1) 2013 figures are restated figures from the 2013 consolidated financial statements (2) Gross income less administrative expenses and amortisation and depreciation charges (3) Average monthly closing balances of total assets. (4) Average monthly closing balances of own funds. (5) Consolidated profit/(loss) for the year / Average total assets. (6) Profit/(loss) attributed to parent company for year / Average own funds. In 2013 own funds at year-end is used because it was negative until the capitalisation in May. (7) (Administrative expenses + depreciation and amortisation) / Gross income. (8) Annual average return on loans and advances to customers less annual average yield on customer deposits (9) Interest and similar income / Average total assets (10) Net loans and advances to customers excluding assets acquired under repos and balances with BFA of 1,105 million euros in 2015 / (customer deposits excluding repo sale of assets + funds for mediated loans of 2,928 million euros in 2015, 4,083 million euros in 2014 and 3,988 million euros in 2013). Bankia Group interim information Bankia Group alternative performance measures (figures in millions of euros and %) 31/03/ /03/2015 Chg. (% & p.p.) Pre-provision profit (1) (20.3%) Average total assets (2) 205, ,097 (11.8%) 15/121

16 Average own funds (3) 11,652 11, % ROA (%) (4) 0.5% 0.4% p.p. ROE (%) (5) 8.2% 8.7% (p.p.) Efficiency ratio (%) (6) 46.8% 42.6% p.p. LTD ratio (%) (7) 103.9% 104.6% (p.p.) (1) Gross income less administrative expenses and amortisation and depreciation charges (2) Average monthly closing balances of total assets. (3) Average monthly closing balances of own funds. (4) Annualised consolidated profit /loss) / Average total assets (5) Annualised attributable profit/(loss) / Average own funds (6) (Administrative expenses + depreciation and amortisation) / Gross income (7) Net loans and advances to customers excluding assets acquired under repos and balances with BFA of 1,105 million euros in March 2016 / (customer deposits excluding repo sale of assets + funds for mediated loans of 3,328 million euros in march 2016 and 3,741 million euros in March 2015). BFA Group annual information BFA Group alternative performance measures (figures in millions of euros and %) 31/12/2015 Strict LTD ratio (1) 113% Adjusted LTD ratio (2) 103% (1) Net loans and advances to customers excluding assets acquired under repos / customer deposits excluding repo sales of assets and single-certificate mortgage covered bonds (2) Net loans and advances to customers excluding assets acquired under repos / (customer deposits excluding repo sales of assets and funds for mediated credits of 2,928 million euros) B.8 Selected pro forma financial information B.9 Profit forecasts or estimates B.10 Qualifications in audit reports Not applicable, as the company's Registration Document contains no pro-forma information Not applicable. The Company has opted not to include forecasts or estimates of future profits in the Registration Document. Not applicable. The individual and consolidated financial statements for the years ended 2013, 2014 and 2015 have been audited by the external audit firm Ernst & Young, S.L., which issued an unqualified audit opinion. Nevertheless, note should be taken of the uncertainties associated with the final outcome of the lawsuits related to the 2011 initial public offering of shares of Bankia, S.A. and the provisions set aside by the Bank in respect of those cases. 16/121