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Spain's Bankia gets cool welcome on Madrid bourse

Spain's Bankia gets cool welcome on Madrid bourse

Spain's third-largest banking group received a cool welcome from investors as it debuted on the Madrid stock exchange Wednesday, with its share price falling slightly on the open.
Bankia began trading at (EURO)3.68 ($5.05), down from its starting price of (EURO)3.75 just 20 minutes after it began trading despite a broad-based rise in the stock market. After losing some 5 percent at one point, it managed to rally to (EURO)3.72 by mid-afternoon.
The flotation was seen as a test of market confidence in Spain's banking system, and the stock's drop suggests investors remain cautious ahead of a key EU summit on the debt crisis on Thursday.
A merger of seven savings banks led by Caja Madrid, Bankia said it raised (EURO)3 billion ($4.3 billion) from the issued shares as part of a process to meet new government-ordered capital requirements. It was the first group of merged savings banks to float its stock.
Bankia's initial public offering is one of the biggest ever in Spain and comes at a time when the country is under severe pressure from investors concerned it might need a bailout.
The drop in Bankia's stock contrasted with overall positive trading on the Ibex 35 benchmark stock index in Madrid, which was up nearly 3 percent early afternoon.
"Reality rules," said Javier Flores, an analyst with Dracon Partners International Investments, of the Bankia's initial price drop.
He viewed Bankia's flotation, however, as "positive, given the situation in the market, which is not the best time to list" and seeing that several international IPOs had had to be postponed or canceled because of the crisis.
"It's a big placement in a difficult atmosphere in country with problems and in a sector that is under the spotlight," he said. "From that point of view, we have to be positive. (Bankia) has passed the test."
The bank's president, former International Monetary Fund chief Rodrigo Rato, said the listing was a success given that it took place during "a time of financial storm."
Bankia just barely passed the stress test carried out on European banks recently. Five Spanish entities, four of them savings banks, were among the eight European banks to fail the test.
Spain's savings banks, or cajas, bore the brunt of the country's real estate collapse that heralded a near two-year recession. New government rules oblige them to boost capital levels or face possible nationalization.
Banca Civica, which combines four savings banks, will float its stock on Thursday. Its opening price is to be (EURO)2.70 and the bank said it would raise (EURO)600 million.
Spain, with 21 percent unemployment and a swollen deficit, is battling to convince investors it can handle its debt and will not need financial help like Greece, Ireland and Portugal.


Updated : 2021-10-20 22:11 GMT+08:00