CNMV WARNING. No. of rights to be exercised. Payment to be made for the share subscription

Transcription

1 CNMV WARNING The shareholders and holders of hybrid securities and subordinated debt to whom the offers are addressed should bear in mind that: Exercise of the preferential subscription rights will entail subscribing for 397 new shares, that is to say, paying euros, for each old share held. After the capital increase the shares of Bankia may suffer a considerable loss of value as a result of the increase in the number of shares and the forces of supply and demand. Under its Decision dated 16 April 2013, the Steering Committee of the Fund for Orderly Bank Restructuring ( FROB ) agreed to carry out various recapitalisation and mandatory hybrid instrument and subordinated debt management measures, as part of the implementation of the BFA-Bankia Group Restructuring Plan. Said Decision envisaged, among others, the following transactions to be carried out by Bankia, S.A.: a) A capital increase with preferential subscription rights in Bankia in a cash amount of 10,700 million euros (Agreement No. Five). b) A capital increase without subscription rights for a cash amount of up to 5, million euros to allow implementation of the hybrid and subordinated debt management measures (Agreement No. Seven). Once the abovementioned transactions have been approved, the CNMV advises shareholders and holders of hybrid securities and subordinated debt to read the Bankia Registration Document and the Securities Notes, especially the section on Risk Factors, before making any decision. In particular, attention is drawn to the following points: 1) In relation to the capital increase with preferential subscription rights in Bankia in a cash amount of 10,700 million euros. Under the terms and conditions of the increase, shares will be issued in a proportion of 397 new shares for each old share held. This means that for each preferential subscription right exercised, the holder must subscribe for 397 new shares, paying euros, given that the subscription or issue price of the new shares is euros per share. To aid understanding, the following table gives some examples of the cash amount to be paid based on the number of rights that are exercised: No. of rights to be exercised Payment to be made for the share subscription 537,007 1, , , , , , , , On the other hand, the issue price of the new shares, euros per share, may be higher than the market price of the Bankia share during all or some of the stock market sessions held during the Preferential Subscription Period, which will run from 30 April to 14 May. Likewise, there can be no assurance, once the capital increase has started, that the value of the preferential subscription rights in the market will be similar to their underlying book value. b) A capital increase without subscription rights for a cash amount of up to 5, million euros to allow implementation of the hybrid and subordinated debt management measures. With regard to the buyback and reinvestment of the term subordinated debt of BFA (section of the Securities Note), the Decision adopted by the FROB establishes that the holders of such securities, provided their securities mature before October 2018, may choose between applying the Buyback Price to the mandatory subscription of newly issued shares of Bankia or, as the case may be in each issue, creating a deposit or amending the terms and conditions of the securities subject to buyback.

2 If a holder has not notified a choice within the allotted period (30 April to 14 May), Bankia, acting in a subsidiary role, shall either subscribe for shares on behalf of the Subordinated Bondholders or amend the original issue, depending on which option was considered to offer the greatest value at the time the Decision was adopted by the FROB. Bearing in mind the volatility the share may experience in the abovementioned period, holders are advised to compare the value of the available options, considering the actual price of Bankia s shares on the date of the comparison, as if the share price does not reach, or falls below, the established issue price, the option of reinvesting in shares could have a lower value than that of the deposit or the amended issue. 3) In relation to both increases. Once both increases have been completed, the number of shares of Bankia admitted to trading could rise to 11,761,948,376 (with a minimum of approximately 11,063,920,462). At present, that is, before the planned increases, Bankia s share capital consists of 19,939,633 shares. Taking into account the maximum number of shares to be issued, a current shareholder who does not exercise the rights will suffer dilution of more than 99%. Considering that the minimum number of shares to be admitted to trading is almost 555 times the number of shares already admitted, once the new shares are admitted to trading there could be a major imbalance between supply and demand. If such an imbalance were to arise, despite the mechanisms provided for in point 6.5 of the Securities Notes to limit or absorb its effects, the market price of the shares could be adversely affected.

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4 TABLE OF CONTENTS 1. PERSONS RESPONSIBLE Persons responsible for the information contained in the Securities Note Declaration of the persons responsible for the information contained in the Securities Note RISK FACTORS KEY INFORMATION Statement regarding working capital Capitalisation and indebtedness Interest of natural and legal persons involved in the issue/offer Reasons for the offer and use of proceeds INFORMATION CONCERNING THE SECURITIES TO BE OFFERED/ADMITTED TO TRADING A description of the type and the class of the securities being offered and/or admitted to trading, including the ISIN (International Security Identification Number) or other such security identification code Legislation under which the securities have been created Indication of whether the securities are in registered or bearer form and whether the securities are in certificated or book-entry form. In the latter case, name and address of the entity in charge of keeping the records Currency of the securities issue A description of the rights attached to the securities, including any limitations of those rights, and procedure for the exercise of those rights In the case of new issues, a statement of the resolutions, authorisations and approvals by virtue of which the securities have been or will be created and/or issued In the case of new issues, the expected issue date of the securities A description of any restrictions on the free transferability of the securities An indication of the existence of any mandatory takeover bids and/or squeeze-out and sellout rules in relation to the securities An indication of public takeover bids by third parties in respect of the issuer s equity, which have occurred during the last financial year and the current financial year. The price or exchange terms attaching to such offers and the outcome thereof must be stated In respect of the country of registered office of the issuer and the country(ies) where the offer is being made or admission to trading is being sought: Information on the tax regime applicable to the New Shares Indication as to whether the issuer assumes responsibility for the withholding of taxes at the source TERMS AND CONDITIONS OF THE OFFER Conditions, offer statistics, expected timetable and action required to apply for the offer Conditions to which the offer is subject /65

5 5.1.2 Total amount of the issue/offer, distinguishing the securities offered for sale and those offered for subscription; if the amount is not fixed, description of the arrangements and time for announcing to the public the definitive amount of the offer The time period, including any possible amendments, during which the offer will be open and description of the application process An indication of when, and under which circumstances, the offer may be revoked or suspended and whether revocation can occur after dealing has begun A description of the possibility to reduce subscriptions and the manner for refunding excess amount paid by applicants Details of the minimum and/or maximum amount of application, An indication of the period during which an application may be withdrawn, provided that investors are allowed to withdraw their subscription Method and time limits for payment for securities and for delivery thereof A full description of the manner and date in which results of the offer are to be made public Procedure for the exercise of any right of pre-emption, the negotiability of subscription rights and the treatment of subscription rights not exercised Plan of placement and allotment The various categories of potential investors to which the securities are offered. If the offer is being made simultaneously in the markets of two or more countries and if a tranche has been or is being reserved for certain of these, indicate any such tranche To the extent known to the issuer, an indication of whether major shareholders or members of the issuer's management, supervisory or administrative bodies intended to subscribe in the offer, or whether any person intends to subscribe more than five per cent of the offer Pre-allotment disclosure Process for notification to applicants of the amount allotted and indication whether dealing may begin before notification is made Over-allotment and 'green shoe' Pricing An indication of the price at which the securities will be offered. If the price is not known or if there is no established and/or liquid market for the securities, indicate the method for determining the offer price, including a statement as to who has set the criteria or is formally responsible for the determination /65

6 5.3.2 Process for the disclosure of the offer price If the issuer s equity holders have pre-emptive purchase rights and this right is restricted or withdrawn, indication of the basis for the issue price if the issue is for cash, together with the reasons for and beneficiaries of such restriction or withdrawal Where there is or could be a material disparity between the public offer price and the effective cash cost to members of the administrative, management or supervisory bodies or senior management, or affiliated persons, of securities acquired by them in tansactions during the past year, or which they have the right to acquire, include a comparison of the public contribution in the proposed public offer and the effective cash contributions of such persons Placement and underwriting Name and address of the co-ordinator(s) of the global offer and of single parts of the offer and, to the extent known to the issuer or to the offeror, of the placers in the various countries where the offer takes place Name and address of any paying agents and depository agents in each country Name and address of the entities agreeing to underwrite the issue on a firm commitment basis, and name and address of the entities agreeing to place the issue without a firm commitment or under "best efforts" arrangements. Indication of the material features of the agreements, including the quotas. Where not all of the issue is underwritten, a statement of the portion not covered. Indication of the overall amount of the underwriting commission and of the placing commission When the underwriting agreement has been or will be reached ADMISSION TO TRADING AND DEALING ARRANGEMENTS An indication as to whether the securities offered are or will be the object of an application for admission to trading, with a view to their distribution in a regulated market or other equivalent markets with indication of the markets in question. This ircumstance must be mentioned, without creating the impression that the admission to trading will necessarily be approved All the regulated markets or equivalent markets on which, to the knowledge of the issuer, securities of the same class of the securities to be offered or admitted to trading are already admitted to trading If simultaneously or almost simultaneously with the creation of the securities for which admission to a regulated market is being sought securities of the same class are subscribed or placed privately or if securities of other classes are created for public or private placing, give details of the nature of such operations and of the number and characteristics of the securities to which they relate Details of the entities which have a firm commitment to act as intermediaries in secondary trading, providing liquidity through bid and offer rates and description of the main terms of their commitment Stabilisation: where an issuer or a selling shareholder has granted an over-allotment option or it is contemplated that price stabilising activities may be undertaken in connection with the offer /65

7 7. SELLING SECURITIES HOLDERS Name and business address of the person or entity offering to sell the securities, the nature of any position office or other material relationship that the selling persons have had within the past three years with the issuer or any of its predecessors or affiliates The number and class of securities being offered by each of the selling security holders Lock-up agreements EXPENSES OF THE ISSUE/OFFER The total net proceeds and an estimate of the total expenses of the issue/offer DILUTION The amount and percentage of immediate dilution resulting from the offer In the case of a subscription offer to existing equity holders, the amount and percentage of immediate dilution if they do not subscribe to the new offer ADDITIONAL INFORMATION If advisors connected with an issue are mentioned in the Securities Note, a statement of the capacity in which the advisors have acted An indication of other information in the Securities Note which has been audited or reviewed by statutory auditors and where auditors have produced a report. Reproduction of the report or, with permission of the competent authority, a summary of the report Where a statement or report attributed to a person as an expert is included in the Securities Note, provide such persons' name, business address, qualifications and material interest if any in the issuer. If the report has been produced at the issuer s rquest a statement to the effect that such statement or report is included, in the form and context in which it is included, with the consent of the person who has authorised the contents of that part of the Securities Note Where information has been sourced from a third party, provide a confirmation that this information has been accurately reproduced and that as far as the issuer is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. In addition, identify the source(s) of the information /65

8 I. SUMMARY The information in this summary (the "Summary") is divided into 5 sections (A-E) and numbered consecutively within each section in accordance with the numbering set forth in Annex XXII of Commission Regulation (EC) 809/2004 of 29 April 2004 related to application of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements. The numbers omitted in this Summary refer to items of information contemplated in that Regulation for other forms of prospectus. In addition, those items of information required for this form of prospectus, but not applicable by reason of the characteristics of the transaction or the issuer, are stated to be "not applicable". SECTION A INTRODUCTION AND WARNINGS A.1. WARNING This Summary must be read as an introduction to the Securities Note (the "Securities Note") and the registration document (the "Registration Document", together with the Securities Note and this Summary being referred to as the "Prospectus") of Bankia, S.A. ("Bankia", the "Bank" or the "Company", together with the companies controlled by it being referred to as the "Bankia Group") registered in the official registries of the National Securities Market Commission (Comisión Nacional del Mercado de Valores, or "CNMV")) on 26 April 2013, which may be viewed on Bankia's website ( and on the website of the CNMV ( Any decision to invest in the securities should be based on the investor's consideration of the Prospectus as a whole. In the event of a possible claim based on the information contained in the Prospectus that is filed in a court, the claimant investor may, under the national law of a Member State of the European Economic Area, have to bear the expenses of having the Prospectus translated before the court proceedings commence. Civil liability may be imposed on the persons filing the Summary, including any translation thereof, only if the Summary is misleading, inaccurate or inconsistent with other parts of the Prospectus, or when read together with other parts of the Prospectus does not provide essential information to assist investors when determining whether or not to invest in the aforesaid securities. A.2 Information on financial intermediaries Not applicable. The Company has not given its consent for any financial intermediary to use the Prospectus in subsequent sale or final placement of the securities. SECTION B ISSUER AND POSSIBLE GUARANTORS B.1 Legal and commercial name of issuer B.2 Issuer's domicile, legal form, applicable law and country of establishment B.3 Description of issuer Bankia, S.A., and in the business environment, "Bankia". Bankia is a Spanish company, of a commercial nature, in the legal form of a corporation, with the status of a bank. Also, its shares are admitted for trading on the Spanish Stock Exchanges by way of the Exchange Interconnection System. As a result, it is subject to the regulation established by the Capital Companies Act, the Act on Structural Modifications of Commercial Companies and other related legislation, as well as the specific legislation for credit institutions and the supervision, control and rules of the Bank of Spain. Also, as a credit institution in the process of restructuring it is subject to Act 9/2012 of 14 November 2012 on restructuring and resolution of credit institutions ("Act 9/2012") and related legislation. Finally, as a listed company, it is subject to the Securities Market Act and its developing regulations. Its registered office is in Valencia at Calle Pintor Sorolla 8. Its tax identification number (Número de Identificación Fiscal, or "NIF") is A-14,010,342. The corporate purpose of Bankia is all manner of activities, operations and services related to the banking sector in general or directly or indirectly related thereto, permitted to it by current legislation, including the provision of investment services and ancillary services and 6/65

9 B.4a Most significant recent trends performance of the activities of an insurance agency, either exclusively or in association, without exercise of both activities. As well as the acquisition, holding and disposition of all kinds of securities, including interests in other lending institutions, investment services undertakings or insurance or insurance brokerage companies, to the extent permitted by the legislation in force. The Bankia Group is the result of a process of integration that ended on 23 May 2011, involving Caja de Ahorros y Monte de Piedad de Madrid, Caja de Ahorros de Valencia, Castellón y Alicante, Bancaja, 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"). This process of integration was implemented in two phases: (i) in the first place, the Cajas that are a part of the integration spun off to Banco Financiero y de Ahorros, S.A. ("BFA") all of their banking and quasi-banking assets and liabilities (the "First Spinoff"), which, in turn, (ii) spun off to Bankia all of its banking business, the investments associated with the financial business and the other assets and liabilities it received from the Cajas by virtue of the First Spinoff or otherwise under the Integration Agreement, excluding certain assets and liabilities that continued to be owned by BFA. Under the provisions of Act 9/2012 of 14 November 2012 on restructuring and resolution of credit institutions, Bankia is an institution in restructuring, the restructuring plan for which was approved by the Bank of Spain and the European Commission on 27 and 28 November 2012, respectively. The scope of consolidation of the Bankia Group includes controlled, associated and jointly controlled companies, engaged in various activities, among which are, inter alia, insurance, asset management, financing, services, and development and management of real estate assets. The principal activities engaged in by Bankia and its investees are grouped in the following business areas: private banking, corporate center and business banking, which includes private banking, asset management, insurance banking and investees. Grupo BFA-Bankia must fulfill the commitments included within the Restructuring Plan that are summarised below, during the period (the "Restructuring Period"): (i) (ii) (iii) (iv) Adjustment of the size of the Bank by transfer of assets to Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria ("SAREB"), which has already been performed. Concentration of its business on commercial banking, that is, it may offer its customers deposits, loans, current accounts, other money transfer services, credits, leasing, credit card transactions, banking insurance products, wealth management, private banking and investment services, commercial financing, currency exchange transactions and online or telephone banking services, among other services. Grupo BFA-Bankia during the Restructuring Period will not engage in the following activities: - Real estate development loans. - Financing of foreign companies outside Spain. - Banking activities with those companies that have access to the capital markets, excluding those of a short-term nature, such as financing working capital and short-term commercial and transactional banking services. Grupo BFA-Bankia, in accordance with the financial projections that are a part of the Restructuring Plan, must satisfy the following economic figures and financial ratios at 31 December 2015: - The net credit portfolio will not be greater than 116 billion euros. At 31 March 2013 and 31 December 2012 the net credit portfolio amounted to 131 and 134 billion euros, respectively. - The risk weighted assets will not be greater than 93 billion euros. At 31 March 2013 and 31 December 2012 the risk weighted assets amounted to 109 and 112 billion euros, respectively. - Total balance sheet assets will not be greater than 257 billion euros. At 31 March 2013 and 31 December 2012 total balance sheet assets amounted to 298 and 309 billion euros, respectively. 7/65

10 (v) (vi) (vii) (viii) (ix) (x) (xi) - The ratio of loans to deposits will not be greater than 133%. At 31 March 2013 and 31 December 2012 that ratio amounted to 134.1% and %, respectively. At the same dates, the ratio calculated as net credit divided by the sum of retail commercial paper, strict customer deposits, brokerage credits and special asset-backed notes amounted to 121.4% and 121%, respectively. - The number of branches will be around At 31 March 2013 and 31 December 2012 the number of branches amounted to 2,900 and 3,041, respectively. - The number of employees will be around 14,500. At 31 March 2013 and 31 December 2012 the number of employees amounted to 19,922 and 20,431, respectively. If any of the aforesaid commitments contemplated in the Restructuring Plan are not fulfilled, Grupo BFA-Bankia must offer corrective actions. Also, Grupo BFA-Bankia has covenanted that the number of branches and employees will not increase after Reduction of branches: within the Restructuring Plan there is a plan for reduction of branches which contemplates the closing of additional branches until reaching around 1950 branches in The majority of the closings will be made in the regions considered not to be strategic for the Group, the weight of the network thus being concentrated in the regions of origin of the savings banks. Staff reduction: the number of employees will be adjusted to the new structure of the Group and the new branch network, with the objective of achieving a figure around 14,500 employees in Regarding the branches subject to the reduction plan, Grupo BFA-Bankia cannot extend new financing to existing customers unless: - It is necessary to preserve the value of the secured loan. - If it is made to minimise capital losses or improve the expected recovery value of the loan. The mortgages existing at the date of the Restructuring Plan are managed in such manner that their value is maximised. In particular, Grupo BFA-Bankia 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: - Grupo BFA-Bankia will not acquire new participations in or branches of business of other companies while the Restructuring Plan is in effect. - Grupo BFA-Bankia will not distribute dividends until 31 December Regarding hybrid instrument management actions, the preferred participating securities and non-term subordinated debt are repurchased with automatic application of the cash obtained to subscription of newly-issued shares of Bankia. Plan for divestiture of nonproductive assets and nonstrategic investments. Bankia in this way expects to dispose of 50 billion euros (from 90 to 40) from transfer to the SAREB ( billion euros), the sale of investees and other portfolio assets and the transfer of credit portfolios. B.5 Group Bankia is the parent of the Bankia Group, which is a part of the consolidated group of credit institutions the controlling company of which is BFA (collectively, "Grupo BFA-Bankia"). B.6 Major shareholders Approximately 48.6% of the share capital of the Company is owned by BFA, an institution that is wholly owned by the Fund for Orderly Bank Restructuring (Fondo de Reestructuración Ordenada Bancaria, or the "FROB"), the remainder of capital being held by minority shareholders. All shares representing the share capital of Bankia are nominative shares, of the same class and series, and enjoy the same voting and dividend rights. The capital increase covered by this Securities Note (the"capital Increase") involves the issue and circulation of 7,910,324,072 new shares having a par value of one euro, representing 99.75% of the share capital of Bankia after the Capital Increase. In addition, the capital increase to cover the buyback of the hybrid capital instruments and 8/65

11 subordinated debt that will be implemented simultaneously with the Capital Increase involves the issue and circulation of up to 3,851,624,304 new ordinary shares having a par value of one euro. Assuming that BFA fully subscribes the Capital Increase and there is 94% acceptance of the capital increase to cover the mandatory buyback of hybrid instruments (preferred participating securities and subordinated debt), it is estimated that the share of BFA in Bankia could increase to approximately 69% of the share capital of Bankia. B.7 Selected historical financial information The balance sheet for the 2012 financial year reflects a size of billion euros at the end of that financial year. The net loss attributed to the Controlling Company was billion euros, a result of the worldwide effort to clean up balance sheets with charges against results in an amount of billion euros, which has been undertaken by the Bankia Group. Selected financial information from the consolidated balance sheet of the Bankia Group at 31 December 2012 and 2011 Assets (data in mn) 31/12/ /12/2011 Change (%) Cash and deposits with central banks 4,570 6,280 (27.2%) Trading portfolio 35,772 29, % Of which: Loans and advances to customers % Available-for-sale financial assets 39,686 25, % Loans and advances to customers 144, ,791 (30.5%) Of which: Loans and advances to customers 134, ,094 (27.1%) Held-to-maturity portfolio 29,159 10, % Hedging derivatives 6,174 5, % Non-current assets held for sale 9,506 3, % Investments 300 2,349 (87.2%) Tangible and intangible assets 1,920 3,572 (46.2%) Other assets 10,882 8, % TOTAL ASSETS 282, ,846 (6.8%) Liabilities (data in mn) 31/12/ /12/2011 Change (%) Trading portfolio 33,655 26, % Financial liabilities at amortised cost 243, ,951 (5.5%) Of which: Customer deposits 110, ,338 (28.6%) Hedging derivatives 2,790 2, % Insurance contract liabilities (26.3%) Provisions 2,869 1, % Other liabilities 5,067 1, % TOTAL LIABILITIES 288, ,353 (0.7%) 9/65

12 Net Worth (data in mn) 31/12/ /12/2011 Change (%) Capital and reserves (5,204) 13,068 - Valuation adjustments (804) (703) 14.2% Minority interests (48) TOTAL NET WORTH (6,056) 12,493 - TOTAL LIABILITIES AND NET WORTH 282, ,846 (6.8%) Selected financial information from the consolidated income statement of the Bankia Group corresponding to the financial years ended 31 December 2012 and 2011 (data in mn) 31/12/ /12/2011 Change (%) Net interest income 3,089 2, % Gross income 4,010 4,099 (2.2%) Net income 1,717 1, % Profit/(Loss) from operations (19,047) (1,867) - Pretax Profit/(Loss) (22,189) (4,307) - Profit/(Loss) for the year (19,193) (2,977) - Profit/(Loss) attributed to the Controlling Company (19,056) (2,979) - Principal solvency, yield, efficiency and quality ratios of the assets of the Bankia Group at 31 December 2012 and 2011 (%) 31/12/ /12/2011 ROE (1) - - ROA (2) - - Tier I Core Ratio (3) 5.2% 8.3% Total solvency ratio (4) 9.8% 8.5% Core capital ratio (5) 4.4% 8.3% EBA Tier I Core Ratio (6) 4.9% 8% Efficiency (7) 50.3% 52.3% NPL (8) 12.99% 7.63% Cover (9) 62% 60% (1) Profit Attributed to the Group / Equity. Not applicable because equity is negative. (2) After-Tax Profit / Average Total Assets. Not applicable due to losses incurred during the financial year. (3) Calculated in accordance with Bank of Spain Circular 3/2008 of 22 May 2008, addressed to credit institutions, on determination and control of minimum capital ("Circular 3/2008"). (4) Calculated in accordance with Circular 3/2008. (5) Calculated in accordance with Royal Decree Law 2/2011 of 18 February 2011 for reinforcement of the financial system ("RDL 2/2011"). (6) Calculated in accordance with EBA/REC/2011/173. (7) (Personnel Expenses + General Expenses) / Gross Income. (8) Total Doubtful Assets (including Loans and Advances to Customers and Contingent Liabilities) / Loans and Advances to Customers and Contingent Liabilities. 10/65

13 (9) Loan Loss Reserve / Total Doubtful Assets (including Loans and Advances to Customers and Contingent Liabilities). B.7 Selected interim financial information The consolidated interim selected financial information for the Bankia Group set forth below, corresponding to the period of three months ended 31 March 2013, has not been subjected to any kind of audit or review by the statutory auditors of the Company. Assets (data in mn) 31/03/ /12/2012 Change (%) Cash and deposits with central banks 3,355 4,570 (27%) Trading portfolio 32,511 35,772 (9%) Of which: Loans and advances to customers (33%) Available-for-sale financial assets 39,084 39,686 (2%) Loans and advances to customers 145, ,341 1% Of which: Loans and advances to customers 131, ,137 (2%) Held-to-maturity portfolio 28,936 29,159 (1%) Hedging derivatives 5,619 6,174 (9%) Non-current assets held for sale 9,664 9,506 2% Investments % Tangible and intangible assets 1,883 1,920 (2%) Other assets 10,372 10,882 (5%) TOTAL ASSETS 277, ,310 (2%) Liabilities (data in mn) 31/03/ /12/2012 Change (%) Trading portfolio 30,645 33,655 (9%) Financial liabilities at amortised cost 241, ,723 (1%) Of which: Customer deposits 117, ,904 6% Hedging derivatives 2,433 2,790 (13%) Insurance contract liabilities (2%) Provisions 2,577 2,869 (10%) Other liabilities 5,131 5,067 1% TOTAL LIABILITIES 282, ,366 (2%) Net Worth (data in mn) 31/03/ /12/2012 Change (%) Capital and reserves (5,130) (5,204) (1%) Valuation adjustments (322) (804) (60%) Minority interests (48) (48) 0% TOTAL NET WORTH (5,501) (6,056) (9%) TOTAL LIABILITIES AND NET WORTH 277, ,310 (2%) 11/65

14 (data in mn) 31/03/ /03/2012 Change (%) Net interest income (39%) Gross income 868 1,311 (34%) Net income (48%) Profit/(Loss) from operations Pretax Profit/(Loss) Profit/(Loss) for the year Profit/(Loss) attributed to the Controlling Company (%) 31/03/ /12/2012 ROE (1) - - ROA (2) 0.12% - Tier I Core Ratio (3) 5.4% 5.2% Total solvency ratio (4) 10.1% 9.8% Core capital ratio (5) 5.2% 4.4% EBA Tier I Core Ratio (6) 5.2% 4.9% Efficiency (7) 51.4% 50.3% NPL (8) 13.08% 12.99% Cover (9) 62% 62% (1) Profit Attributed to the Group / Equity. Not applicable because equity is negative. (2) After-Tax Profit / Average Total Assets. Not applicable due to losses incurred during the 2012 financial year. (3) Calculated in accordance with Circular 3/2008. (4) Calculated in accordance with Circular 3/2008. (5) Calculated in accordance with RDL 2/2011 at 31 December 2012 and in accordance with Act 9/2012 at 31 March (6) Calculated in accordance with EBA/REC/2011/173. (7) (Personnel Expenses + General Expenses) / Gross Income. (8) Total Doubtful Assets (including Loans and Advances to Customers and Contingent Liabilities) / Loans and Advances to Customers and Contingent Liabilities. (9) Loan Loss Reserve / Total Doubtful Assets (including Loans and Advances to Customers and Contingent Liabilities). B.8 Selected pro forma financial information B.9 Profit forecasts or estimates B.10 Qualifications in audit reports Not applicable. Not applicable. The Company has chosen not to include forecasts or estimates of future profits in the Registration Document. Not applicable. The individual and consolidated annual accounts of Grupo BFA-Bankia corresponding to the 2011 and 2012 financial years, closed at 31 December, were audited by Deloitte, S.L. with no qualifications in its corresponding reports. 12/65

15 B.11 If working capital is not sufficient for the current needs of the issuer, include an explanation Not applicable. The Company believes that the working capital currently available, together with the working capital it expects to generate over the next 12 months, is sufficient to meet the Company's current business needs over the next 12 months. SECTION C SECURITIES C.1 Type and class of the securities offered C.2 Currency of the issue The offered securities are newly-issued ordinary shares of Bankia, with a par value of one euro each (the "New Shares"). They enjoy full voting and economic rights, are all of the same class, and will confer the same rights on their holders as the Bank's existing shares, with effect from the moment that the Capital Increase pursuant to which the New Shares are issued is declared to be subscribed and paid up. With the exception of the New Shares, all the Bank s shares are currently admitted for trading on the Madrid, Barcelona, Bilbao and Valencia Stock Exchanges through the Sistema de Interconexión Bursátil Español (Continuous Market) under ISIN ES The National Agency for the Codification of Securities, part of the CNMV, will assign the New Shares a provisional ISIN until they are assimilated to the Bank shares currently in circulation. Once listed for trading, all Bankia shares will trade under the same ISIN. The Bank's shares are denominated in euros ( ). C.3 Share capital The share capital of Bankia amounts to 19,939,633 euros, represented by 19,939,633 shares, with a par value of one euro each, of the same class and series, fully subscribed and paid up. C.4 Rights associated with the shares C.5 Restrictions on the free transferability of the securities C.6 Admission to trading of the shares The New Shares will give their holders the rights contemplated for shareholders in the Capital Companies Act and the Bylaws of Bankia; such as (i) the right to participate in the distribution of corporate earnings and the proceeds of liquidation; (ii) the right to attend and vote at General Meetings; (iii) a preferential right in the issue of new shares or bonds convertible into shares; (iv) the right to participate in the profits of the Bank; (v) the right to participate in any remainder in the event of liquidation; and (vi) the right to information. Bankia s bylaws set no restrictions on the free transferability of the shares. Application will be made for admission to trading of the New Shares of the Bank on the Madrid, Barcelona, Bilbao and Valencia stock exchanges through Spain's Exchange Interconnection System (Continuous Market). Based on the contemplated schedule, the admission to trading of the New Shares will occur on 27 May C.7 Dividend policy Under the BFA-Bankia Group's Restructuring Plan, the bank will pay no dividends until 31 December Thereafter, dividend payments will depend on the Bank's profits and financial position at the time, as well as its cash requirements and other relevant factors. SECTION D RISKS Before deciding to subscribe the New Shares issued in the Capital Increase, investors must carefully weigh the risk factors included in the Prospectus, a brief summary of which is set forth below. D.1 Key information regarding principal specific risks of the issuer or its business sector Set forth below is a brief summary of the risk factors described in the Registration Document. 13/65

16 (A) (i) The FROG becoming a shareholder of BFA, the restructuring plan and capital requirements Entity indirectly controlled by the FROB On 27 June 2012 the FROB became the sole shareholder of BFA after the request by the Board of Directors of BFA to convert the convertible preferred participating securities (participaciones preferentes convertibles, or "PPCs") subscribed by the FROB on 28 December 2010 into shares of BFA. The conversion was made with the corresponding authorisation of the European Commission (of 27 June 2012) after the corresponding valuation process. In addition, the FROB is the holder through BFA of a 48.6% indirect interest in the share capital of Bankia. The interests of the FROB, as a public institution, may not coincide with those of Bankia and its minority shareholders, bearing in mind in particular that the FROB controls other banking groups in restructuring that are competitors of Bankia. Also, the FROB has requested advice in the long-term strategic planning of the Group I entities (Grupo BFA- Bankia, NCG Banco and Catalunya Caixa). The aforesaid planning may imply some kind of banking coordination of those entities. In any event, at the date of the Registration Document neither the results of the aforesaid advice nor such decisions as may be adopted by the FROB in this regard are known. (ii) Bankia is an entity in restructuring Under the provisions of the Memorandum of Understanding on Financial-Sector Policy Conditionality of 20 July 2012 (the "MOU"), Grupo BFA-Bankia is a "Group 1" entity. The Bank of Spain and the European Commission approved the Restructuring Plan on 27 and 28 November 2012, respectively. Among the commitments assumed by Grupo BFA-Bankia in the Restructuring Plan is reduction of the real estate portfolio, focusing of the activities of the Group on retail banking and companies, management of hybrids, divestiture of the investment portfolio, reduction of capacity and other additional obligations that could affect the commercial strategy of Grupo BFA-Bankia or implementation of corporate transactions. (iii) If Bankia does not comply with the Restructuring Plan the Bank of Spain may proceed with resolution of the Company If, among other circumstances, Bankia is in serious breach of the terms or measures of the Restructuring Plan, the Bank of Spain may, ultimately, initiate resolution of Bankia, which could imply future sale of its business or transfer of its assets or liabilities to a third party. Also, compliance with the Restructuring Plan implies certain restrictions and commitments assumed by Bankia. If Bankia is not capable of effectively and timely handling those restrictions and commitments, the business, operating results and financial situation of Grupo BFA-Bankia may suffer a material adverse effect. (iv) Negative net worth At 31 December 2012 the individual and consolidated net worth of Bankia was negative ( and billion euros, respectively). (v) Capital and capital requirements At 31 December 2012, the share capital of BFA was comprised of billion shares having a par value of one euro, fully subscribed and paid up by the FROB. The core capital of Grupo BFA-Bankia at the close of 2012 was 2.7%, and that of the Bankia Group was 4.4%. Set forth below is the solvency status of the Bankia Group at 31 December 2012 under the various rules applicable at that date. Tier I capital and core capital include the issue made by Bankia and subscribed by BFA of contingent convertible bonds in an amount of 10.7 billion euros: 14/65

17 Bankia Group solvency (Data in mn and %) 31/12/ /12/2011 Amount % Amount % Circular 3/2008 Tier I Capital (T-I) 5, % 12, % of which, Core Capital 5, % 12, % Supplementary Capital (T-II) 5, % % Eligible capital 10, % 13, % Total Minimum Capital 8, % 12, % Capital surplus/(deficit) 1, Risk-Weighted Assets 104, ,535 RDL 2/2011 Core capital 4, % 12, % Total minimum core capital 8, % 12, % Core capital surplus/(deficit) (3,754) 493 Risk-Weighted Assets 104, ,535 EBA Core Tier I 5, % 12, % Minimum Total EBA Core Tier I 9, % 14, % EBA capital surplus/(deficit) (4,279) (1,530) EBA Risk-Weighted Assets 105, ,533 Once the restructuring actions contemplated in the Decision of the Governing Board of the FROB of 16 April 2013 have been taken, it is expected that the Group will exceed the 9% core capital required by Bank of Spain Circular 7/2012 of 30 November 2012 ("Circular 7/2012") from 1 January At 31 March 2013 the Risk Weighted Assets amounted to billion euros, core capital pursuant to Circular 7/2012 was billion euros (5.2%) and EBA Total Core Tier I was billion euros (5.2%). (vi) Transfer of assets to SAREB On 31 December 2012 Grupo BFA-Bankia transferred credits against real estate development and construction companies from 250,000 euros and real estate assets foreclosed in Spain in an amount greater than 100,000 euros to SAREB, thereby reducing the real estate risk of Grupo BFA-Bankia. The gross book value transferred to SAREB corresponded to assets in an amount of billion euros, based on balances at 31 December Formalisation of the transfer of assets of Bankia and its subsidiaries to SAREB was for a net book value of billion euros. As is customary in transactions for the purchase and sale of assets, both BFA and Bankia, in their capacity as sellers, made a series of representations and warranties in favor of SAREB, as purchaser, regarding the assets transferred, and assumed certain indemnification commitments in the event of inaccuracy of those representations and warranties or breach of the obligations assumed by BFA and Bankia in the agreement. In addition, within the term of 36 months after the date of the transfer, SAREB, on the basis of either the classification of the assets applied by the FROB, or their book value, may determine, on one or more occasions, that there has been an error in the classification of the assets, or that they are assets transferred before the date of transfer by the entities, or that there is a difference from the value estimated at 31 December To the extent that such errors or variations are discovered and corrections are made there may be adjustments to the transfer price by way of calculation of the amounts to be adjusted, as a result of which Grupo BFA-Bankia may be required to reimburse a part of the consideration received for transfer of the assets. Without prejudice to the foregoing, a possible correction of the value or change of the tax scheme applicable to transfer of the assets as initially applied may result in the existence of contingencies or tax implications that also could have a negative effect on the business, financial situation and results of Grupo BFA-Bankia. (vii) Risk deriving from administrative, judicial and arbitration claims deriving from the marketing and management of the hybrid instruments and the Restructuring Plan 15/65

18 The Restructuring Plan contemplates that the actions for management of hybrid instruments (preferred participating securities and subordinated debt), which will be implemented within the context of the principles and objectives related to the sharing of the restructuring costs of the financial institutions established in Act 9/2012, will generate approximately 6.6 billion euros of additional capital in Grupo BFA-Bankia. Nevertheless, the effect of these actions for management of hybrid instruments may be reduced in the event of a decision unfavorable to the interests of Grupo BFA-Bankia in the administrative, judicial and arbitration proceedings that have arisen or may arise regarding the marketing and buyback of the aforesaid hybrid instruments, which could result in a need for additional support and the assumption by Grupo BFA-Bankia of new commitments. (viii) Risk of losses deriving from legal and regulatory proceedings There is a risk that the Bank may suffer losses deriving from legal and regulatory proceedings arising from the relationships of the Bank with its customers, competitors, shareholders, employees, institutions or any other agent. (B) Risks deriving from the Bankia integration process As a result of its recent integration, Grupo BFA-Bankia has a very short history as a consolidated group and, therefore, there are limited consolidated historical data serving as a basis for investors to evaluate the business, operating results and prospects of Grupo BFA-Bankia. The limited operating history of the Group also means that Bankia has more limitations when making financial forecasts. (C) (i) Credit, real estate, liquidity, market and interest rate risks Credit risk The credit risk is defined as the risk of loss assumed by Grupo BFA-Bankia as a result of the customary conduct of its banking business, in the event of breach of the contractual payment obligations of its customers or counterparties. The deterioration of the quality of existing risk may result in an increase in doubtful balances and, therefore, require additional increases of coverage under applicable regulations, which take account of the cover percentages to be applied based on the term and type of security, applying reductions to the latter based on their nature. Similarly, inadequate management of the credit risk by Bankia could have an adverse effect on its business, results and financial situation. The NPL rate at 31 December 2012 increased to 12.99%, by comparison with 7.63% at 31 December The NPL cover ratio (provisions of the Bank to cover losses by reason of deterioration of its risks over the total of the risk categorised as being nonperforming) was 61.8% at 31 December 2012, and 60.2% at 31 December At 31 March 2013, the NPL rate amounted to 13.08%, and the cover ratio was 63%. (ii) Real estate risk On 31 December 2012 Grupo BFA-Bankia transferred assets in a gross amount of billion euros to SAREB, of which were assets belonging to the Bankia Group. The net value at which the transfer was made was billion euros. As consideration Grupo BFA-Bankia received securities issued by SAREB, guaranteed by the State. Of this amount, billion euros corresponded to assets belonging to BFA and its subsidiaries, and billion euros to assets belonging to the Bankia Group. This transfer having occurred, the Bankia Group has a net real estate credit on the balance sheet of billion euros, comprised of credits against developers, corresponding to a gross billion and provisions of billion. As a result, the real estate exposure risk of the Bankia Group has decreased considerably. Also, in accordance with the provisions of the Restructuring Plan, Grupo BFA-Bankia will cease to finance developers. (iii) Liquidity risk The structural liquidity risk covers the uncertainty, under adverse circumstances, of the availability of funds at reasonable prices, allowing timely fulfillment of the commitments undertaken by the Bank and financing of the growth of its lending business. Inadequate management thereof by the Bank could have an adverse effect on the business, results and financial situation of Bankia. The Assets and Liabilities Committee (Comité de Activos y Pasivos, or "COAP") is the body having responsibility for monitoring and management of the liquidity risk in accordance with the determinations and criteria approved by the Board of Directors. The COAP approves the operating rules for attracting financing through the use of instruments and terms in order at all times to guarantee the availability at reasonable prices of funds allowing timely satisfaction of commitments assumed and financing of the growth of the lending business. In the active management of liquidity risk, the Bankia Group uses three principal lines of action: reduction of the customer funding gap by way of attracting traditional customer liabilities and deleveraging of the balance sheet, increasing the liquidity reserve in the ECB to be used as contingent resource in the event of paralysis of capital and 16/65