MADRID |
(Reuters) - Small investors in shares of in Spain's nationalized lender Bankia suffered new massive losses on Thursday as the stock plunged by more than 50 percent amid an abnormally high volume of trading which the stock market regulator said would be looked at closely.
Tens of thousands of small savers, who were often missold preferred shares and hybrid debt in Bankia, swapped their investment for ordinary shares on Thursday at a an average discount of around 40 percent.
But while they had hoped the move would help them recoup part of their money, they instead saw how the new shares, initially valued at 1.35 euro each and which they cannot exchange until next Tuesday, lost 51.4 percent on the day to close at 0.68 euro.
While analysts had widely expected the share price to drop and adjust to 1.35 euro before the bank received 15.5 billion euros ($20 billion) of fresh funds, the abnormally high trading volume registered on Thursday raised eyebrows at the stock market regulator.
A source with knowledge of the matter said some institutional investors who were also forced to swap their hybrid debt and preference shares at a discount may have engaged in naked short-selling to compensate for their losses.
Naked short-selling, where traders sell a stock they don't own in order to make a profit by buying it at a later date at a lower price, is not allowed under Spanish market rules.
Bankia said in a statement that after the new cash injection its parent group BFA owned 68.4 percent of its capital while former holders of hybrid debt and preference shares owned 31 percent and current shareholders hold the remaining 0.5 percent. ($1 = 0.7751 euros)
(Reporting by Julien Toyer, additional reporting by Sarah White; editing by Andrew Hay and David Gregorio)
