Reuters: Hot Stocks: RPT-UPDATE 1-Bankia shares tumble 20 percent after rescue share issue

Reuters: Hot Stocks Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

RPT-UPDATE 1-Bankia shares tumble 20 percent after rescue share issue May 28th 2013, 07:45 Tue May 28, 2013 3:45am EDT (Repeats to additional Reuters codes) * Bank issues more than 11 bln shares as part of recap plan * Issue leaves Spanish state with 68.4 percent * Restructuring plan, business conditions still challenging * Asset sales, low share price vs peers could help By Julien Toyer MADRID, May 28 (Reuters) - Shares in state-owned Spanish lender Bankia tumbled 20 percent at the open on Tuesday as the bank completed a multi- billion euro cash injection. More than 11 billion shares issued as part of a 15.5 billion euro ($20 billion) recapitalisation of the bank started trading at 0700 GMT, in what was meant to be a new beginning after a 24 billion euro bailout last year. But some analysts say the stock could remain under pressure, with little hope of a quick recovery amid tough business conditions. They say the shares could settle at a price ranging from 0.45 euro to 0.60 euro, below the initial trading price of 0.6 euro, the 1.35 euros at which they were issued and their theoretical value of 1 euro. At 0710 GMT, the shares recovered slightly and were down 10 percent at 0.54 euros, valuing Bankia at 6.2 billion euros and making it Spain's fourth-biggest bank by market capitalisation. Following the cash injection, the Spanish state owns 68.4 percent of Bankia, with the rest held by former holders of preference shares and hybrid debt, often small savers who were mis-sold these complex financial instruments and were forced to swap them at a discount for ordinary shares. Most of them were expected to sell these new shares on Tuesday to try to recoup part of their money, adding downward pressure to a stock which lost more than 50 percent last week when institutional investors triggered a mass sell-off as they received their shares. Further pressure will come from a recession which economists expect to last at least another two quarters. The bank also needs to pay back public aid and cheap European Central Bank (ECB) loans received last year and faces a possible new round of provisioning to cover losses on the refinanced loans portfolios. Prospects for the bank are also clouded by uncertainty over government plans for handling state-owned banks and potential risks from arbitration over the mis-selling of preference shares and hybrid debt which it could have to settle in cash. Yet Bankia Chairman Jose Ignacio Goirigolzarri remains positive, saying last week the stock price should eventually settle at around 0.7 to 0.8 euros, a valuation in line with those of Spanish peers which all have a share price of between 0.7 to 0.8 times their book value. Bankia should benefit from the clean-up of its property business, a strategy to sell non-core assets and a likely comeback within Spain's blue-chip IBEX 35 index. ($1 = 0.7734 euros) (Editing by David Cowell and David Holmes) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions