The woes of Spain’s Bankia dragged down shares in British Airways owner International Airlines Group today amid speculation that the struggling lender is set to dump its 12% stake in the business.
Bankia was forced to throw itself on the mercy of the Spanish government over the weekend as it asked for €19 billion (£15.2 billion) to save itself from collapse.
After the funds have been injected, Madrid will own a 90% stake in the bank, whose shares plunged 27% today.
The Spanish lender had a former majority stake in Iberia, which merged with BA in 2011. Shares in IAG fell 2p to 138.8p today as the bank’s new president Jose Ignacio Goirigolzarri outlined plans over the weekend to sell off its industrial holdings. The IAG stake is worth about £300 million, based on today’s prices.
The rescue package kept up the pressure on Spain as its cost of borrowing hit a new six-month high of 6.5% today.
Investors are worried by the rising costs for Spain of helping its banks after sources said that Madrid would recapitalise Bankia with government bonds in return for shares.
Spain’s banks are labouring under the effects of a bust property boom but the nation’s dire economy is also widening concerns about other non-performing loans, according to Daiwa Capital Markets Europe banking analyst Michael Symonds.
