Shares in Spain's troubled Bankia plummet 26pc
Shares in Spain’s bailed-out Bankia plummeted by 26 per cent on Friday after the authorities exposed a sea of red ink in the lender ahead of a huge bailout.
Shares in Spain’s bailed-out Bankia plummeted by 26 per cent on Friday after the authorities exposed a sea of red ink in the lender ahead of a huge bailout.
The bank’s shares plunged 25.72 per cent to 41 euro cents by early afternoon on the Madrid stock exchange.
Earlier in the day, they hit a low of 36.3 cents, down 34.2 per cent from the previous close.
Bankia and its parent BFA, which lie at the heart of a Spanish banking crisis, said on Thursday the group had received 17.959 billion euros (US$24 billion) in public money to fix its balance sheet.
The public rescue, financed with a eurozone rescue loan of up to 100 billion euros agreed with Madrid in June, will heavily dilute the value of existing shares.
The bailout will notably involve converting 10.7 billion euros in “contingent convertible bonds”, or CoCos, into shares. The CoCos, bonds that convert into equity because a specified event occurs, were issued by Bankia and subscribed to by its parent BFA.
Bankia’s shares have plunged in value by 89.1 per cent since they were floated at 3.75 euros on the Madrid stock exchange in July last year.
Spain’s stock exchange regulator, the CNMV, said Bankia would be suspended from the IBEX-35 index of leading shares as of January 2.
“Once the convertible bonds are converted into ordinary shares and that has been officially published, the committee will adopt the appropriate decisions on the matter,” it said.
On Wednesday, Spain’s state-backed Fund for Orderly Bank Restructuring, or FROB, said Bankia had a negative value of 4.148 billion euros and its parent group BFA a negative value of 10.444 billion euros.
Spanish banks are still struggling with a mass of loans that turned sour after a property bubble collapsed in 2008.
A first slice of 37 billion euros already received in eurozone aid is aimed at cleaning up four nationalised banks: Bankia, NovaCaixaGalicia (NCG), Catalunya Banc and Banco de Valencia.
