Bankia Update

Readers will find out if we are right or wrong about this as soon as next Monday, but it seems to the writer that one of the immediate benefits of Monday's virulent outbreak of true European credit contagion will likely be a warmer welcome for the institutional segment of the IPO of what will be the eurozone's newest top-10 bank - Bankia. What has always been a matter of state for the Spanish government, the success of this endeavour will now also be a continental priority. Readers could expect banks (even if it turns out to be the book runners themselves) to fill whatever breach there might be.

With barely concealed glee, on the other hand, el economista accidental informs us that one of the book runners, Barclays, has availed itself of the opportunity offered by Bankia's announcement of the maximum price of the issue to modify its commitment* to Rodrigo Rato's baby. Yesterday's submission to the Spanish market supervisor, the CNMV, notes (besides fixing 5.05 euros as the maximum) that the British bank had decided to only take up 6.41 percent of the retail, non-institutional, portion of the IPO - rather than the previously agreed 8.97. A quick calculation, based on the 60 percent that Bankia intends to sell to the public, reveals that Barclays is backing out of 1.54 per cent of the total issue.

For readers not familiar with all this, the book runners (or primary underwriters) agree to buy up entire portions of an equity or debt issue with the intention of reselling at a higher price. Barclays decision comments not only on the minimal interest in Bankia among foreign retail investors but also, by the small allotment size, the minimal expectations with regard to this group on the part of the principals.

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