Bankia bailout authority moves closer to diluting shareholders
SHARES in Spanish lender Bankia plunged yesterday on fears the recapitalisation plan for the group could almost wipe out investors.
The nationalised institution applied for a European rescue worth €18bn (£15.48bn), leaving shareholders fearing the worst.
Spanish newspaper reports that the Fund for Orderly Bank Restructuring (FROB) would value shares at €0.01 sent the stock tumbling.
But the FROB gave no valuation, instead simply warning that a dilution will play a part in the recapitalisation.
“The entity’s negative valuation and its end-2012 projected results indicate the price at which the FROB (will participate in Bankia) will entail a big reduction in the shares’ nominal value in order to absorb losses,” the FROB said.
The bank’s stock opened down 22.65 per cent at an all-time low, but rose a touch later on to end the day down 1.7 per cent.
The group was put together as a merger of regional lenders but has struggled through the housing bust.