December 14, 2018 / 11:49 AM / a year ago

Spain's Bankia nears sale of $3.4 billion in bad credit to Lone Star: source

FILE PHOTO: Spain's Bankia logo is seen inside bank's headquarters before a news conference to present their annual results in Madrid, Spain, January 30, 2017. REUTERS/Sergio Perez

MADRID (Reuters) - Spanish state-owned lender Bankia is nearing a deal to sell bad loans and repossessed property valued at 3 billion euros ($3.4 billion) to U.S. fund Lone Star, a source with knowledge of the negotiations said on Friday.

Lone Star declined to comment.

Spanish newspaper El Confidencial reported earlier that the talks were at an advanced stage and could be concluded by the end of the year, adding the assets could command a price of around 1 billion euros.

Responding to the report, Bankia said in a statement to Spain’s market regulator that it was in talks to sell a portfolio of expropriated real estate and doubtful loans, but gave no further details.

The transaction would help Bankia’s ongoing bid to shed bad loans built up after Spain’s real estate sector collapsed in 2008, pitching the economy into recession.

After pumping 22.4 billion euros into a rescue package for Bankia in 2012, the Spanish state is gradually selling off its 61 percent stake.

The bank aims to sell 8.8 billion euros in bad loans by 2020.

Reporting by Carlos Ruano, writing by Isla Binnie; Editing by Kirsten Donovan

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