MADRID (Reuters) - Repriced shares in Spain's nationalized lender Bankia (BKIA.MC) see-sawed at the open on Monday, falling by as much as 9 percent and rising by as much as 6 percent as they begin what will be a dramatic adjustment over the coming month.
The shares closed at 0.172 euro on Friday, but after a consolidation which grouped every 100 shares into one, trade started on Monday with the price at 17.2 euros.
However, the price is expected to plummet to below 1 euro in May after the bank completes a recapitalization with European rescue funds and also converts outstanding hybrid debt into shares, hugely diluting current shareholders.
"We expect a gradual adjustment to the share price until the day the shares created by the hybrid conversion into equity enter the market (at the end of May)," Societe Generale analysts said in a research note on Monday.
"We recognise that the split and the anomaly in the share price can create confusion."
Societe Generale said its 12-month target for Bankia's share price is just 0.65 euros.
Bankia, the biggest failed bank in Spain's history, put a par value on its shares of a bare minimum of 0.01 euros last month, which has now risen to 1 euro after the consolidation.
After the recapitalisation is complete there will be more than 11 billion Bankia shares in issue and the existing shares will represent less than 1 percent of the bank's capital.
Bankia is undergoing a 15.5 billion euro capital hike in two phases, the first related to a 10.7 billion euro convertible bond issue subscribed to by Bankia's parent, BFA.
The second phase of the capital hike will consist of the conversion of hybrid debt into shares, a so-called bondholder bail-in which will reduce the bank's liabilities by around 4.84 billion euros.