preferred shares scandal

Bankia investors suffer further losses

Preferred shareholders already suffered a discount as a result of the European bailout

Shares in lender Bankia plunged further on Monday ahead of the launch of a capital increase on Tuesday to effectuate the compulsory swap of hybrid debt instruments, such as preferred shares, for common stock.

After heavy losses last week, Bankia's shares fell a further 7.7 percent to 0.60 euros, the lowest price since it listed in July 2011 at 3.75 euros per share. The swap price was set at 1.35 euros.

Preferred shareholders already suffered a sharp discount on the value of their holdings as a result of the terms of the European bailout of Bankia and other Spanish banks. In addition to that, Bankia's share price is down 55 percent on the swap price set in April. As a result, preferred shareholders will lose 70 percent of the value of their investment at Monday's closing price.


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