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Bankia suffers biggest ever loss by Spanish bank

Lender booked a shortfall of 7.053 billion euros in first nine months, suffering huge run on deposits in period

Nationalized bank Bankia has suffered the biggest loss ever posted by a Spanish lender as a result of its ill-fated exposure to the sclerotic real estate sector.

It was in the red to the tune of 7.053 billion euros in the first nine months of the year and posted a loss in the third quarter alone of 2.605 billion as a result of provisions to cover losses from toxic property assets.

Bankia said asset impairments cost it 11.485 billion euros in the period. The bank has now covered 75 percent of the provisions for real estate assets required by the Bank of Spain in two decrees approved earlier this year.

Loans to the private sector declined 11.9 percent to 139.584 billion euros, while client resources in the shape of deposits fell 25.1 percent. Deposits alone fell 14.257 billion euros from the end of September to 98.793 billion as clients lost faith in the lender. As a result its share of the deposit market in Spain dropped from 10.4 percent to 9.4 percent in August.

Nevertheless, the bank made an operating profit in the period of 306 million euros before provisions, largely the result of net interest income of 744 million and commissions of 226 million.