UPDATE 1-Spain's Bankia sells IAG stake for 675 mln euros
* Sells stake to institutional investors at 3 percent discount
* Bankia makes 167 million euro capital gain
* IAG shares down 1.5 percent in London
MADRID, June 27 (Reuters) - Spanish bank Bankia sold a 12.1 percent stake in the International Airlines Group to institutional investors on Thursday for 675 million euros ($877 million), potentially opening a period of shareholder instability for the airline.
The Spanish government had direct influence in IAG, which is currently overhauling Spain's loss-making flagship carrier Iberia, through Bankia's stake. The new owners are unknown.
Bankia, which was bailed out by the Spanish state last year, has been under pressure to sell its corporate shareholdings, but the disposal of IAG, also parent of British Airways, comes at a difficult time for the Spanish airline.
Analysts said the IAG sale was earlier than anticipated.
"The key is going to be finding out who the real buyer is," BPI analyst Joao Safar said.
Iberia has become unprofitable in all markets, including long haul, and its problems are critical, IAG said last week.
Bankia's stake in IAG was sold at 256 pence per share, Bankia said, a 3 percent discount on Wednesday's closing price, and bringing in a 167 million euro capital gain for the lender.
IAG's shares were trading at 260.1 pence at 0802 GMT, down 1.5 percent, versus a 0.3 percent decline by European travel stocks and after a 72 percent rise in the last year.
Bankia's strategic plan following its state rescue last year targets 8 billion euros ($10.4 billion) from the sale of stakes in listed companies, which include a 5.1 percent stake in utility Iberdrola and 20 percent of tech firm Indra .
The sale of IAG is the first to take place.