BlackRock, the world's largest investor, has given a negative "strong dislike" rating to Spain's Bankia in a blow to the Spanish savings bank and the other cajas planning to raise funds this summer, according to an internal document seen by Financial News. The failure to attract large institutional investors could lead to more bank nationalisations in Spain.
The internal document does not specify reasons for its negative view, but acknowledges that a successful floatation is vital for the country's restructuring of its banking system.
The BlackRock document said: "We believe the IPO of Bankia will be a key test for the Bank of Spain, which has been encouraging an overhaul of the country's savings banks with a view to restore investor confidence and make funding conditions easier for the sector.
"The price of failure of Bankia's IPO would be high for Spain, which so far has injected a relatively small sum into its banking sector, compared with other European governments."
Bankia, a group formed by the merger of CajaMadrid and six other, smaller cajas, is trying to raise between EUR3.8 billion and EUR4.5 billion, ahead of a stock market listing on July 20. The lender plans to sell 60% of the new shares to retail investors, with the rest being allocated to institutions.
Spain's large domestic banks are expected to support the deal, as a failure would damage the country's entire financial system. International investors have repeatedly expressed concerns over the cajas' loans to the now-collapsed domestic real estate market.
Bankia said in its prospectus that as much as 45% of its loan book is linked to domestic mortgages.
The cajas that fail to raise fresh funds to shore up their capital buffers will be nationalised, the Spanish government has ruled. Such a scenario would increase the country's deficit, at a time that Spain is fighting to avoid a Greek, Irish or Portugal-type bail-out.
The stability of the Spanish and Italian banking systems is seen as key to the soundness of the European Union, following the bail-outs of the three smaller countries, as any potential rescue would be more expensive. Spain is the eurozone's fourth largest economy.
Both Bankia and BlackRock declined to comment.
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