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Bankia shares continue to plummet
By:
ThinkSpain , Thursday, May 17, 2012

Shares in Spanish bank Bankia have continued their dramatic plunge, as concerns about the firm's finances increase.

The share price dropped another 15% on Thursday, taking losses for May to 45%. On Wednesday, Bankia, which was formed by a merger of seven troubled regional savings banks, said it was delaying the release of its first quarter results.

The Spanish government denied a report in the El Mundo newspaper that customers had taken more than 1bn euros out of the bank, which is set to be part-nationalised, over the past week.

The government, meanwhile, has had to pay sharply higher rates of interest to borrow money on the bond markets.

On Wednesday, Spain's Prime Minister Mariano Rajoy warned that borrowing costs could become "astronomical" as fears about the weakness of its banks persist.

The markets fear further bad debt news from the bank. Bankia is already setting aside 4.7bn euros, the highest among Spain's banks, to cover loans that could go bad.

The Spanish government is currently choosing independent auditors to look at the property debts held by Spanish banks, as part of the government's plan to strengthen the banking system.

 
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