Shares in Spain's Bankia plunge over restructuring

Shares in bailed-out Spanish lender Bankia plunged by as much as 25 percent Friday after authorities said shareholders will have to shoulder part of the burden of its restructuring. Bankia shares plummeted on the Madrid IBEX-35 stock index Friday morning before recovering some of these losses to stand about seven percent lower in early afternoon trading. The volatile action reversed some of the gains made this week, when Bankia shares shot up by about 40 percent on reports that Spain would soon receive the first part of a eurozone bailout for its banking sector. At around 1.40 euros on Friday afternoon, the stocks were still just over a third of the price at which they launched on the stock market in July 2011, having plunged since Bankia was nationalised to save it in May. This nationalisation prompted Spain to turn to its eurozone neighbours to borrow up to 100 billion euros ($123 billion) to secure its banks, weakened by masses of bad loans from a building boom that went bust in 2008. The state body set up to take over struggling banks, known by its Spanish acronym FROB, poured cold water on the Bankia stock rally by recalling the strict conditions attached to the banking bailout. It issued a statement late Thursday reminding investors that "shareholders must bear part of the cost of cleaning up" Bankia, which has said it needs 23.5 billion euros in state aid.