Editor’s note: This article was first published in August 2012. It was written on 11 August 2012 about the trading session of 10 August: share prices, the 32% intraday rise and 20% fall, and Banco de Valencia’s 140% jump. Bankia was later recapitalised with public money and merged into CaixaBank in 2021.
There are three ways of doing things: the right way, the wrong way, and the Spanish way, which is a mix of two offshoots of the wrong way (the bad and the worse). Bankia was on a rally on the stock market until the FROB issued a statement to the market (the FROB is Spain’s bank restructuring fund), with the aim of bursting that bubble, supposedly to protect savers and small shareholders.
On Friday, Bankia went from being up 32% (which, on top of its earlier gains, meant it had already tripled in value from its lows) to closing down 20%. This was serious negligence by the CNMV (Spain’s securities regulator), since when there are “circumstances that may harm the normal functioning of trading” a stock is usually suspended. In this case, the statement was meant to bring the price down and, as is more than obvious, trading was not suspended. So far from protecting small savers and retail investors, they have once again been left “stuck” at the top, above €1.50–1.60, while the real sharks have already pocketed their tidy profits.
The first people to be swindled with Bankia shares have also seen their chance to recover part of their value cut short. They bought at €3.75, and with these gains some of them would at least have had the chance of losing only 50% of the money they invested.
Clearly, Bankia’s bull rally was neither logical nor normal, and we all assumed it was pure speculation, just like Banco de Valencia, a company as bankrupt as Bankia, which had risen 140% on the stock market in a single session.
Even so, we have no choice but to thank the FROB for the warning, and at the same time to ask a question: why wasn’t the same concern shown when Bankia was about to go public at a price that every investment forum considered far too inflated? Who audited the accounts of that financial union called Bankia to justify that price?
I remember that at the time there were articles describing “Bankia and Banca Cívica as a scam endorsed by the CNMV”. In the end it proved to be an outright scam on small investors and people who had nothing to do with the world of investing. While unsuspecting pensioners were being taken by the arm to sign for Bankia preference shares, there were no warnings from the CNMV or the FROB. Those warnings should have come long before Rodrigo Rato, with that beaming smile, rang the bell to open Bankia’s stock market debut.
The FROB’s warning has come a year late. Now that the company is bankrupt is when it can go up, whereas at its IPO, given the accounts it presented and the scam involved, it only had one way to go, which, as we have seen, is down.
