Bankia S.A.

Solid retail banking franchise in Spain. Enhanced risk management to benefit future credit performance. Improving asset quality. Still moderate, albeit improving, capitalization. Modest core operating profitability. Large holding of less liquid SAREB bonds. Standard&Poor's Ratings Services' outlook on Spain-based Bankia S.A. is positive, reflecting the possibility that we could raise our long- and short-term ratings on Bankia by one notch in the next 12-18 months if the bank continues to enhance its capital position in line with its targets. We currently estimate the bank's risk-adjusted capital (RAC) ratio will account for about 6.8%-7.0% as of end-2015, following the successful implementation of several actions. We anticipate that organic capital generation, combined with potential issuance of hybrid instruments to comply

...Outlook: Positive Standard & Poor's Ratings Services' outlook on Spain-based Bankia S.A. is positive, reflecting the possibility that we could raise our long- and short-term ratings on Bankia by one notch in the next 12-18 months if the bank continues to enhance its capital position in line with its targets. We currently estimate the bank's risk-adjusted capital (RAC) ratio will account for about 6.8%-7.0% as of end-2015, following the successful implementation of several actions. We anticipate that organic capital generation, combined with potential issuance of hybrid instruments to comply with MREL requirements (minimum requirement for own funds and eligible liabilities), could allow Bankia to sustainably push its RAC ratio above 7% by end-2017. Moreover, a further reduction of economic risks in Spain could also benefit our view of Bankia's solvency. We could revise the outlook to stable if we concluded that the bank will not be able to achieve a sustainable RAC ratio above 7%. Specifically,...

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