Stock at Spain's Bankia tumbles after new shares issued

Small shareholders protest against Bankia outside of Spain's Congress in Madrid on 

 

May 28, 2013.

Tue May 28, 2013 5:35PM

ADICAE, a campaign group representing the small stakeholders, said 200,000 customers at the bank were cheated into converting their savings into shares and that the savers risked losing 75 percent of their investment if they sold their stake."

Stocks in Spain’s finance group Bankia have tumbled after new shares hit the market, causing small stakeholders to protest over the losses.

Bankia issued on Tuesday 11.5 billion euros (USD 14.8 billion) in fresh shares on the Madrid stock exchange as a part of its restructuring after the bank was nationalized last year.

The new shares were issued to replace high-risk investments held by existing Bankia stakeholders.

The savers were promised that the new shares would be traded at 1.35 euros. However, they were down to 0.55 euros (USD 0.70) during Tuesday’s trading.

The move angered the small stakeholders, most of whom planned selling their shares on Tuesday in an attempt to recover part of their money.

ADICAE, a campaign group representing the small stakeholders, said 200,000 customers at the bank were cheated into converting their savings into shares and that the savers risked losing 75 percent of their investment if they sold their stake.

Some analysts say the stocks could remain under pressure, with little hope of a quick recovery amid tough business conditions.

On the same day, between 200 and 300 people, who had bought the shares, staged a protest outside the Congress to voice their frustration while facing new losses.

The Spanish government bailed out the bank in 2012 and it has also received 18 billion euros from European funds to rebuild its capital.

Bankia was created in 2010 from the merger of seven troubled savings banks after its property sector crashed in 2008.

CAH/MA/SS