Bankia shares slide on “negative value” assessment
Shares in Bankia have slid almost 20% after Spain’s bank rescue fund said the troubled lender had a negative value of -4.2bn euros (£3.4bn; $5.6bn).
Bankia’s parent company, BFA, which is being bailed out, was deemed to be worth -10.4bn euros.
The assessments suggest losses on bad loans are even worse than expected.
Bankia shares will be suspended from Spain’s benchmark Ibex index from 2 January until at least after it is recapitalised, the stock exchange said.
The Spanish government-owned bailout fund, which is called the FROB, said that a further 13.5bn euros of rescue money would have to be injected into BFA, on top of the 4.5bn provided by Madrid in September.
The money, which is ultimately provided by the eurozone’s bailout fund, is being injected into the bank via the sale of new shares in BFA to the FROB.
By doing this, the FROB increases the bank’s capital – its ability to absorb potential future losses on the loans it has made – by putting Spanish taxpayers’ money at risk.
Bankia is the largest of a string of Spanish banks to suffer massive losses on the loans it made to property developers and home buyers during the country’s property bubble in the past decade.
As well as Bankia, three other banks are currently being patched up by the FROB – Catalunya Banc and NGC of Galicia, as well as Banco de Valencia, which was in such bad shape that it is being sold off to another, privately-owned bank.
thats spain..its screwed..but you wont hear it to much from mainstream..they like us to think they can fix anything..