STOCK MARKET WATCH -- Friday, 25 May 2012

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54. Trading in Bankia shares halted pending aid demand

http://hosted.ap.org/dynamic/stories/E/EU_SPAIN_FINANCIAL_CRISIS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-05-25-06-59-48

MADRID (AP) -- Spain's market regulator suspended trading of shares in bailed-out Bankia on Friday ahead of a key board meeting at which the lender is expected to decide how much more rescue money it needs from the government.

A market commission statement said trading was being halted because "a concurrence of issues could affect the normal exchange of the bank's shares." Bankia's board meeting will start in the early afternoon, but details will be announced only on Saturday, the company said.

Spanish banks were heavily exposed to the country's burst real estate bubble and now hold massive amounts of soured investments, such as defaulted mortgage loans or devalued property. Bankia, Spain's fourth largest bank, has been the worst-hit and holds (EURO)32 billion ($40 billion) in such toxic assets.

Bankia was created from the merger of seven regional banks, or cajas, that were deemed too weak to stand alone. But financial concerns have continued to plague it - the price of its shares has fallen more than 50 since they went public last July. The government decided to intervene earlier this month, effectively nationalizing it. Bankia shares had closed at (EURO)1.6 ($2.01) on Thursday after shedding more than 7 percent.