Spaniards rail at Bankia as savings evaporate

MADRID: Spanish savers vented their fury against bailed-out Bankia yesterday after the already-diminished value of their stock investments in the bank plummeted by more than half in a single day. The stock market regulator, the CNMV, said it would examine trading in Bankia shares on Thursday, when the value of the stock plunged 51.4 percent to just 0.68 euros ($0.88) in brisk trade. By coincidence, the market rout came a day before chiefs of Spain’s biggest banks came to testify as witnesses at the National Court in Madrid about Bankia’s ill-fated listing in July 2011.

“Thieves”, cried a group of protesters who gathered outside the court as the bank chiefs arrived. Bankia president Jose Ignacio Goirigolzarri told radio Cope he welcomed the regulator’s inquiry into Thursday’s trading, which he could not explain. “It is difficult to understand, I don’t understand it,” he said. The Bankia boss said he suspected institutions had engaged in short-selling, in which traders bet that a stock price will fall.

The Spanish daily El Mundo also reported several banks had engaged in short selling. As the price collapsed, many small investors called their bank branches wanting to sell their Bankia shares, but were told they had to wait until Tuesday, Spanish media said. In theory individual investors could have sold their shares on Thursday, said Soledad Pellon, strategist at brokerage house IG Markets.

“But they don’t know these practices. Institutional investors are much better informed about all the possibilities,” Pellon said, adding that she believed the trade was legal. Another brokerage house, Link Securities, said it believed the short-selling flouted Spanish regulations. “These sharp drop puts small shareholders in a weaker position because they can’t sell and now face heavy losses,” the group said.

On Tuesday, Bankia will boost its share capital by 15.54 billion euros, which had been expected to lead to an average loss of 36-38 percent for existing shareholders. Thursday’s slump makes those losses much greater, however. The investigation into the share trading comes as the courts investigate the original listing of Bankia nearly two years ago, with 33 bank officials suspected of fraud, embezzlement and providing false annual accounts.