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The world's largest Investment group, BlackRock, has reacted unfavourably Bankia's Initial Public Offering (IPO) - a confidence blow not just to Bankia, but to the other cajas planning to raise funds this summer, according to a report today in the WSJ. If the cajas do not succeed in gaining sufficient support from investors it could result in more banks being nationalised.
The document, which was not meant for public release, does elaborate with reasons for their opinion, but acknowledges that a successful floatation is key to the restructuring of the country's banking system.
The leaked document read: "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 is hoping to raise up to EUR4.5 billion before floating on the stock market in 2 weeks time. The Bank intends to offer 60% of the new shares to retail investors, with the rest being sold to larger institutions.
The lender has already admitted that 45% of its loan book is linked to domestic mortgages.