This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

P.M. Rajoy Says Spain Faces Tough Year Ahead

Bankia was formed in 2010 in a merger of seven troubled and unlisted Spanish savings banks, and was floated on the Spanish stock exchange last year. Its shares, a large number of which were sold to individual savers and pensioners, have fallen nearly 80 percent in value since the floatation.

Officials with the country's bank bailout fund ⿿ the Fund for Orderly Bank Restructuring ⿿ revealed late Wednesday that Bankia was worth minus ⿬4.2 billion. The bank's negative value ⿿ a result of combining the bank's current balance sheet with the level of business it is expected to generate in the future ⿿ was due to worse-than-expected losses of ⿬3.2 billion on toxic property investments.

FROB has used the negative value to determine the size of Bankia's capital injection. The bank, and parent company Banco Financiero y de Ahorros, have received a ⿬18 billion bailout to strengthen their balance sheets ⿿ ⿬4.5 billion of which was paid in September.

In a statement released Thursday, BFA said it had received a capital increase of ⿬13.5 billion. Bankia itself will receive ⿬10.7 billion of this in the form of bonds.

With both of these operations completed, the BFA-Bankia group said its capital ratios would be "above legal requirements" and would increase its capital levels over the next three years to ⿬5.4 billion.

However, investors have been offloading their shares in Bankia over the past few days because the ⿬10.7 billion in bonds will convert into shares next year, thereby significantly diluting the value of existing stock.

As a result of the capital increase, Bankia will be suspended from the IBEX-35 index of leading Spanish shares in January.

Bankia's falling share price Friday also hit Banco de Valencia, another nationalized lender, whose stock fell 20 percent, having closed 21 percent down the previous day.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs