Shares for Spanish Bankia lender plummet again | News | DW | 17.05.2012
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Shares for Spanish Bankia lender plummet again

Shares in the Spanish bank that was partially nationalized last week slumped to a one-year low in morning trading only to recover somewhat in the afternoon. A report of mass withdrawals prompted this latest wobble.

A Spanish media report prompted Bankia shares to take another nosedive in Thursday morning trading, hitting a low-watermark of 1.17 euros ($1.48) just after lunch before recovering much of the day's losses. Still, the lender, partially nationalized by Spain last week, has shed roughly one half of its value in the month of May.

A newspaper report in the El Mundo daily, saying that frightened customers had withdrawn over a billion euros from the bank over the past week, was thought to have prompted the fresh slide. The paper cited information from a recent board meeting; Reuters news agency said Bankia and Bank of Spain declined to comment on the report.

The government in Madrid took partial control of the country's fourth-largest lender on May 9, in an attempt to dispel concerns about the bank's ability to cope with recent losses. The move coincided with increased speculation that the Spanish banking sector might be at risk.

Spain is one of the eurozone countries scrambling to introduce cost-cutting measures, while almost one quarter of the workforce is currently unemployed. More than half of 18-25-year-olds seeking work in Spain do not have a job.

The country also issued its latest bond auction on Thursday, and was forced to pay considerably higher borrowing costs than last time. The Spanish treasury was forced to pay roughly 5 percent interest on three- and four-year bonds, compared to the roughly 3.4 percent rate paid on four-year bonds when they were last auctioned one month ago.

msh/ccp (AP, Reuters)