Trading in shares in Bankia, Spain’s fourth-largest bank, has been suspended in Madrid.
Bankia asked them to be suspended ahead of a board meeting this afternoon to reformulate its accounts for 2011 and submit a plan to shore up its finances.
The bank is reported to be due to ask the government for a bailout of more than 15 billion Euros ($19 billion).
Bankia, which is Spain’s fourth-largest bank, was part-nationalized two weeks ago because of its problems with bad property debt.
Any extra government money would be on top of the 4.5 billion Euros in state loans that the government converted into shares in the group in the part-nationalization process.
Shares in Bankia’s parent company Banco Financiero y de Ahorros (BFA) have also been suspended.
Bankia had to reassure its savers last week that their money was safe after a Spanish newspaper reported a run on the bank.
Bankia was created in 2010 from the merger of seven struggling regional savings banks. It holds 32 billion Euros in distressed property assets.
Spain’s economy minister Luis de Guindos said on Wednesday that the government would pump at least 9 billion Euros into Bankia but that more would be available if it was needed.
There have been four attempts by Spanish governments to shore up the banking system since the global banking crisis of 2008.
As part of the latest plan, lenders are having to make 30 billion Euros of extra provisions to cover potential losses on property loans, which comes on top of 54 billion Euros they were ordered to set aside in February.
The health of Spain’s banking system is key to whether the country eventually needs to seek a bailout itself from the eurozone and the International Monetary Fund.
But Professor Santiago Carbo Valverde of the University of Grenada, said he thinks Spain’s other large banks are not in as difficult a situation as Bankia.
“Bankia has huge exposure to real estate and bad loans, much larger than other banks.
“Other banks may have trouble as the government is demanding more capital, but I don’t think we will have another big case like Bankia.
“The three largest ones are in better shape as they have lower exposure to bad loans and they are more internationally diversified.”
Spain’s credit rating was downgraded by Standard & Poor’s last month on the basis that it would probably have to take on more debt to support its banks.
Its shares fell 7.4% on Thursday to close at 1.57 Euros, which is 58% down from their listing price in July 2011.
• Formed in December 2010 from merger of seven troubled banks
• Most toxic assets moved into holding company BFA
• Listed on the Madrid stock exchange in July 2011
• Chairman Rodrigo Rato resigned earlier in the month before Bankia was part-nationalized