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EU wants bare minimum share price for Spain's Bankia: source
The share valuation figure is crucial as the bank prepares to get a 10.7 billion-euro ($13.9 billion) capital injection from European rescue funds in the form of bonds which will be converted into shares at the price currently being determined.
The bank - a merger of seven savings banks that were highly exposed to the property market bubble that burst five years ago - became the focus of Spain's banking crisis when it asked for a massive bailout in 2012, pushing Spain to request 40 billion euros in European aid for a number of troubled banks.
It reported last week a loss of more than 19 billion euros for 2012 but projects a return to profit this year and aims for a net profit of 1.2 billion euros by 2015.
The proposed minimal share valuation was disputed by the Spanish authorities, which wanted a value of 0.10 euros per share valuation, sources familiar with the matter told Reuters last week.
Bankia shares were trading at 0.299 euros a share at around 1100 GMT, more than 92 percent less than the 3.75 euros at which the bank was listed in 2011 following an aggressive marketing campaign to sell the shares to ordinary domestic investors.
A valuation at 0.01 euro means a loss of 99.7 percent since the flotation.
"The share price has to be the minimum under Spanish laws for share prices," said the EU source.
The source said the European Commission set out the principle, but not the figure, in Bankia's restructuring plan approved in November last year after its billion-euro rescue.
"We never adjust restructuring plans unless financial stability is at risk. Equity holders have to contribute," the person said.
Bankia's chairman Jose Ignacio Goirigolzarri told reporters on the sidelines of an event in Madrid on Tuesday that the decision from the European Commission "was not unexpected".
"The destruction of value was big. Was it a mistake to float the bank ? Of course, yes," he said.
According to Manuel Conthe, a former chairman at Spain's Securities and Exchange Commission (CNMV) who is now at Madrid-based law firm Bird & Bird, the minimum nominal price for shares under Spain´s Stock Exchange listing requirements is 0.01 euros.
"This applies not only to new shares in IPOs but also to existing shares," Conthe said.
EU Commission spokesman for competition policy, Antoine Colombani, declined to comment on Bankia's valuation but said: "The decision on Bankia's restructuring still applies."
(Additional reporting by Jesus Aguado and Sarah White in Madrid; Editing by Julien Toyer and Greg Mahlich)