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MADRID, March 21 (Reuters) - Spain's Bankia will seek on Friday to sell its recovery to some of its fiercest critics, the thousands of small investors who lost money in the country's biggest-ever corporate bail-out.
Bankia, transformed from a symbol of Spain's financial crisis to the pin-up of an economic recovery after returning to profit in 2013, will face shareholders at an annual meeting for the first time since the state began selling down its majority stake.
The share offering last month attracted investors such as billionaire financier George Soros, and international funds now own over 19 percent of the bank's capital, up from under 4 percent last May.
But Bankia still draws the ire of many retail investors, including some who say they were mis-sold complex securities such as preference shares - a cross between a bond and a stock - and ended up as reluctant shareholders.
About 285,000 people, including many pensioners, held Bankia preference shares and subordinated debt which were exchanged for shares at varying discounts, after Bankia took part of a 41.3 billion euro ($57 billion) rescue from Europe.
Formed through the merger of seven savings banks in 2010, Bankia was crippled by soured property investments and rescued in mid-2012, less than a year after listing on Madrid's stock exchange. It has taken 22.5 billion euros in state aid altogether and is now 60.1 percent government-owned.
Consumer group ADICAE - which wants investors to demonstrate before the meeting in Valencia, eastern Spain - said earlier this week that a Madrid court had accepted a class action lawsuit, grouping complaints from 3,200 families against Bankia over the alleged mis-selling.
Bankia launched an arbitration process, handled by consultancy KPMG, so that small investors who believe they were defrauded can try and get their savings back.
So far 137,476 clients have been successful, with payouts worth over 1 billion euros.
Some analysts calculate that small investors who have not gone down this route may yet recover their funds through share price rises. Those who bought preference shares from Bankia predecessor Caja Madrid could break even at around 1.86 euros per share.
Bankia's stock closed at 1.51 euros per share on Thursday, up around 160 percent since last year's shareholder meeting in June. It reported a 521 million euro profit for 2013, after a 19.2 billion euro loss the year before. ($1 = 0.7189 euros) (Writing by Sarah White; Editing by Ruth Pitchford)