Spain denied there was a deposit flight from troubled lender Bankia SA today as shares in the partially nationalised bank plunged by as much as 30 per cent.
"It's not true that there is an exit of deposits at this moment from Bankia," economy secretary Fernando Jimenez Latorre, who reports to the economy minister, told a news conference.
The government on May 9th took over Bankia, the country's fourth-largest lender, in an attempt to dispel concerns over the bank's ability to deal with losses related to the 2008 property crash.
Uncertainty over the final cost of Spain's banking reforms has stoked investor fears that an expensive international bail-out could be on the cards, adding to concerns about the survival of the euro zone.
A report in El Mundo newspaper today said customers had taken out more than €1 billion over the past week, equivalent to around 1 per cent of retail and corporate accounts at the bank.
Bankia and the Bank of Spain declined to comment on the report.
Newly appointed chairman Jose Ignacio Goirigolzarri informed a board meeting yesterday about the exit of funds from the bank, El Mundo said, citing information from the board meeting it had seen.
There was no sign of any abnormal activity at Bankia branches in Madrid on Thursday. A few clients told Reuters that they had checked in with their branch manager regarding their deposits, but most said they were not moving them.
Bankia released data late on Tuesday showing deposits were stable in the first quarter of the year, although this was before doubts about the viability of the bank reached fever pitch and the government stepped in.
Shares in Bankia slumped as much as 30 per cent today, compounding a week of falls, as small investors who had participated in a July stock market listing sold their holdings which have lost nearly two-thirds their value since the flotation.
The stock later recovered to trade down 10.94 per cent at €1.47 per share.
Separately, a government spokeswoman said the bidding process to select an external auditor to value real estate assets across the banking sector was still open and denied
Oliver Wyman and BlackRock had been chosen as sources previously told Reuters.
"We are at the stage of receiving pitches," she said today.
Reuters
