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Bankia shares suspended in Spain

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Shares in Bankia SA, Spain's fourth largest bank, have been suspended on the Madrid stock exchange, amid reports that the struggling bank was expected to ask the state for a rescue of more than 15 billion euros ($19b).

The market regulator CNMV said on Friday it was "due to circumstances that may affect the normal share trading".

Bankia requested the suspension ahead of a board meeting to decide on a recapitalisation plan, "in view of the lack of precision on the figures" ahead of the decision, the bank said in a statement.

Bankia's shares plummeted 7.43 per cent on Thursday to close at 1.57 euros, taking total losses to more than 58 per cent since their listing in July 2011.

On the same day the Spanish government had announced a $11bn bailout for the troubled bank.

Spain's fourth-largest bank, Bankia was part-nationalised two weeks ago because of its problems with bad property debt.

Any extra government money would be on top of the $5.6bn in state loans that the government converted into shares in the group in the part-nationalisation process.

'Viability plan'

Jane Foley, senior foreign exchange strategist for the Dutch bank Rabobank, said: "I think that the Spanish banking sector is a very key part of the whole eurozone crisis. And the fear is if the bank isn’t saved, there could be a wider run on those deposits."

"We don’t think the Spanish government has the money," she said.

"This is why the market is concluding that it is very possible at some point of time, the Spanish government may have to concede it needs outside help.

"It would be looking to its eurozone allies and bailout funds to help prop-up those Spanish banks."

Luis de Guindos, the Spanish economy minister, told parliament on Wednesday that the government would provide any capital needed to turn the bank around.

He said the "viability plan" to be drawn up by the board Friday must specify the capital required to fully meet tougher new banking rules introduced by government reforms in February and May.

There have been four attempts by Spanish governments to shore up the banking system since the global banking crisis of 2008.

Bankia was created in 2010 from the merger of seven struggling regional savings banks.

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