Bankia to take charge to settle Aviva claim

10th Dec 2012 10:55

Bankia announced that it plans to take a 900m-euro charge this year in order to eventually compensate British insurance group Aviva for damages after breaking the conditions established in their alliance in the insurance business.Spanish daily El Economista reports that the British company demanded a payment of €934.6m and took Bankia to arbitrage court at the Commerce Chamber of Madrid for breaking the alliance that Bancaja signed in 2000 to distribute Aviva's insurance products.Bancaja is one of the saving banks that merged to form Bankia. The merger created a conflict because three other savings banks that make up Bankia also had exclusive distribution contracts with rival insurers. Aviva wants Bankia to buy a 50% stake of their Aseval joint venture.In recent months, however, both parties have reached common grounds in order to avoid anything from being decided by an arbitrator. A resolution was expected by the end of this year although it can be delayed if both parties maintain talks for an agreement.The nationalised Spanish bank opened Monday's trading session with the largest loss on Madrid's Ibex35, down as much as 5% before trimming the loss down to 2.22%.SB