Bankia hit by report of withdrawals

Bankia, a Spanish bank, plunged by more than a quarter after a report that customers had withdrawn 1 billion Euro from the bank in the past week alone. Spanish banks have seen heaving selling in the past week on concern that the sector's exposure to the bad loans has deepened.

By Alexandra Stevenson in London and Miles Johnson in Madrid
Last updated: May 17, 2012 2:32 pm
Financial Times

Shares in Bankia, the Spanish bank that was part-nationalised last week, plunged by more than a quarter on Thursday morning, after a report that customers had withdrawn €1bn from the bank over the past week.

The shares fell 27 per cent in morning trade to €1.21 in an initial reaction to reports in El Mundo, a national Spanish newspaper, that customers had withdrawn the large amount, citing information from a recent board meeting.

Spain’s stock market regulator placed the shares “under auction”, a process used to allow market participants to cope better with heavy trading volumes.

The bank later issued a regulatory filing, which said the evolution of deposits in the first half of May was seasonal.

“Bankia’s depositors can be absolutely calm about the security of the savings they have in the bank,” José Ignacio Goirigolzarri, president, said on Wednesday to 300 executives of the bank, according to the filing.

The statement added the bank did not expect substantial changes in the deposits balance in coming days. By mid-afternoon trading, the shares had pared losses to trade 11.2 per cent lower at €1.47.

The self-styled “leader of the new banks” was formed from seven cajas last year and has now shed nearly 70 per cent of its market capitalisation since its shares were listed in July last year.

Last week the Bank of Spain announced banking sector reforms for the fourth time, requiring banks to set aside an extra €30bn of capital to provision against bad property loans.

Concerns about the sector’s exposure to about €180bn of bad loans have deepened, and Spanish banks have seen heavy selling over the past week.

On Thursday morning, shares in Banco Popular tumbled 7.1 per cent to €1.86, while Bankinter fell 5 per cent to €2.94. Caixabank, Spain’s biggest domestic retail lender by number of customers, fell 3.8 per cent to €2.19.

Bigger banks with less exposure to the domestic market were swept up in the selling. Santander, Europe’s biggest bank by assets, fell 2.8 per cent to €4.39, while BBVA slipped 2.8 per cent to €4.77.

Volatility among lending stocks helped to drive the broader IBEX 35 index down 1.6 per cent to 6,507.30.

Lenders across Europe fell, with the FTSE Eurofirst banking sub-index sliding 2.3 per cent to a new year-low of 342.09.

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