May 16, 2012 / 11:36 AM / 7 years ago

Bankia shares drop 10 percent after it delays results

MADRID (Reuters) - Shares in recently nationalised Spanish bank Bankia (BKIA.MC) tumbled 10 percent on Wednesday after it delayed first quarter results, raising fears the government will have to plough more cash into the struggling lender.

Bankia lies at the core of concerns about Spanish banks’ problems after a 2008 property crash. Some believe Spain or Europe will have to inject funds into the sector to avert a collapse of the financial system, worsening the euro zone debt crisis.

“The problem right now is that nobody really knows what Bankia is worth and how much money the state is finally going to pump into Bankia. The uncertainty is absolute,” a Madrid-based trader said.

Bankia’s parent company, Banco Financiero y de Ahorros (BFA), has not yet presented its own 2011 results while it waits for the auditor, Deloitte, to sign off on its accounts.

Deloitte identified a 3.5 billion euro shortfall in the valuation of BFA’s stake in Bankia, sources close to the bank have said. Deloitte has declined to comment on the matter.

Shares in Bankia, which the government took control of last week, dropped to 1.68 euros, having already fallen about 30 percent since Chairman Rodrigo Rato resigned on May 7 in anticipation of the government move.

The delay in presenting Bankia’s first quarter figures came as the spread on yields between Spanish and German benchmark bonds rose to more than 500 basis points, a record high in the euro area, indicating the market’s growing discomfort at holding Spanish debt.

A consumer rights group on Wednesday called for mass protests on behalf of Bankia’s shareholders, who have seen their investments collapse by over half since a July stock market listing.

Bankia has insisted there have been no signs of depositors closing accounts as a result of the nationalisation. Deposits were stable in the first quarter of the year, the bank said late on Tuesday, although this was before the government stepped in.

The Bank of Spain has asked for a new restructuring plan for the failed lender, Bankia said in a statement late on Tuesday, including measures to strengthen management and plans for asset sales.

Bankia’s board was due to meet on Wednesday for its first meeting with Jose Ignacio Goirigolzarri as chairman to discuss strategy and a management overhaul, sources with knowledge of the matter said.

“The final objective will be to clean up Bankia’s balance sheet and then to find a buyer for a company that is almost in liquidation,” says Alejandro Ruyara, analyst at Kepler Capital Markets.

Parent BFA will present audited 2011 accounts before the end of the month. It is not clear whether it would present audited first quarter results at the same time.

The government will convert 4.5 billion euros of state loans to BFA into equity under plans announced last week, giving the state a 45 percent stake in Bankia. It has an option to take another 2.9 percent stake and is expected to merge BFA and Bankia to take control of both of them.

It also plans to inject up to 10 billion euros into the failed lender, sources have said.

Bankia presented a restructuring plan to the Bank of Spain at the end of March as part of a February bank reform that demanded banks write down 54 billion euros in losses on bad property investments.

Bankia said on Tuesday that unaudited first-quarter net interest income increased to 844 million euros, with operating profit at 492 million euros before making provisions against real estate exposure.

The bank did not provide a net profit or loss figure.

The bank must make provisions of around 7.4 billion euros against real estate investments under government demands, including write downs on foreclosed property and bad loans and bolstering capital against possible defaults on sound loans.

This is huge in comparison to the bank’s earning capacity and nearly half the bank’s estimated equity of around 16 billion euros.

Reporting by Sonya Dowsett and Jesus Aguado; Editing by Fiona Ortiz and Will Waterman

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