Bankia Shares Plunge on Report of Deposit Flight: Madrid Mover

Bankia Shares Plunge on Report of Deposit Flight
A customer uses an automated teller machine outside a Bankia SA bank branch in Madrid. Photographer: Angel Navarrete/Bloomberg

Bankia SA, the publicly traded arm of the banking group taken over by the Spanish government last week, plunged as much as 29 percent after El Mundo reported that the lender’s depositors were withdrawing their money.

Shares in Bankia, the lender with the biggest asset base in Spain, fell 14 percent to 1.42 euros at the 5:30 p.m. market close in Madrid. The maximum intraday decline was the biggest since the bank sold shares in its initial public offering last July. Bankia shares have fallen 62 percent since May 4, the last trading day before Chairman Rodrigo Rato’s May 7 announcement that he was quitting.

A spokesman for Bankia declined to comment on the El Mundo report, which said depositors had withdrawn about 1 billion euros ($1.3 billion) since May 9, the day the government said it was taking over the lender. On May 15, Bankia published preliminary first-quarter financial data rather than a full earnings report, saying it may need to amend the figures to take account of a pending full audit of its 2011 accounts.

“It’s an accumulation of bad news for Bankia,” Juan Pablo Lopez, an analyst at Espirito Santo Investment Bank in Madrid, said by phone. “Obviously, the El Mundo report is negative.”

Bankia’s activity in recent days has been “basically normal,” Chairman Jose Ignacio Goirigolzarri said. The lender is “tremendously solid,” he said in a video message today.

Deputy Economy Minister Fernando Jimenez Latorre said earlier today during a briefing in Madrid that Spain has no concern about money being withdrawn from banks and there is no deposit flight from Bankia.

Santiago Lopez, an analyst at Exane BNP Paribas, yesterday cut his price target for Bankia to 95 euro cents from 2 euros. “It is crystal clear to us that existing shareholders face, at best, massive dilution after the announcements of the past weeks,” he said in a report dated May 16.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE