Tuesday, February 19, 2013
Bankia Investors Fear Stock Will Be Declared Worthless
Fri., February 15, 2013
Small retail clients who invested in Spain's nationalised Bankia face substantial losses, with the bank's shares temporarily suspended on the Madrid stock exchange on Thursday morning amid rumours that existing stock would be declared almost worthless, The Guardian reported. The Frob, the country's bank restructuring fund, was forced to admit that the price it will set for swapping debt into shares at the bailed-out bank would be low – but denied reports that it would value shares at just 1 euro cent each. Spain's Expansión newspaper had reported that the Frob had set the 1 cent level for shares that, when floated amid an aggressive marketing campaign in 2011, were valued at €3.75 (£3.23) each. About 350,000 retail investors are thought to have bought at up to that price. A valuation of 1 cent would in effect wipe out their investments. Bankia asked to be rescued last year as it drowned in a sea of toxic real estate left over from a residential construction bubble that burst five years ago, leaving a million new properties unsold.