Shares in crisis-ridden Spanish bank Bankia plunged again as details of a public rescue exposed the extent of its problems.
Shares fell 25pc to 41 euro cents in Madrid after the bank and its parent company BFA said it had received almost €18bn (£15bn) to bolster its balance sheet.
The bailout was funded by a eurozone rescue loan after the region’s members were forced to step in when it became clear Spain alone could not deal with the crisis facing its lenders.
The rescue will dilute the value of Bankia’s existing shares, involving the conversion of €10.7bn of “contingent convertible bonds” into equity.
CNMV, the Spanish stock exchange regulator, said Bankia would be suspended from the IBEX-35 index of leading shares from January 2.
Earlier in the week Spain’s state-backed Fund for Orderly Bank Restructuring said Bankia had a negative value of €4.15bn, while BFA had a negative value of €10.4bn.
Bankia has been at the centre of the Spanish banking crisis, triggered by their exposure to toxic property assets. Bankia is the country’s fourth-largest lender and was formed in 2010 by merging seven of Spain’s regional savings banks. It has the greatest exposure to those problem assets.
Earlier this year the Spanish Government was forced to part-nationalise the lender, and customers pulled a reported €1bn out of the bank. The bank said last month it would cut 6,000 jobs, or around 28pc of staff, by 2015 to try and stem losses.
Bankia said it hoped to return to profit in 2013, but warned that it expected to report a record loss of €19bn this year. Bankia also plans to close more than 1,000 branches as part of the restructuring.
Meanwhile the European Commission approved a €90bn restructuring plan for the Franco-Belgian bank Dexia (Other OTC: DXBGF - news) . The Commission said the plan would allow the core banking business of the bailed out company to be wound up, while the remaining assets would be put on a more stable footing.