EU advisor backs compensation claims over Bankia's 2011 IPO

MADRID: Institutional investors should be able to claim compensation for the money they lost as a result of Bankia's ill-fated listing in 2011, the advocate general of the European Court of Justice said on Thursday.

The advisers opinion, which is non-binding, follows a request for clarification from Spain's Supreme Court to the ECJ regarding a claim from insurance company Mutua Asistencial de Seguros against Bankia regarding the lender's role in its IPO.

Less than a year after Bankia's IPO raised 3.1 billion euros, of which 60% belonged to retail investors and 40% to institutional shareholders, the lender restated a 2011 profit of around 300 million euros with a 3 billion euro loss.

Spain's top court, which in previous rulings acknowledged that Bankia's initial public offering contained "serious inaccuracies as to the true financial condition of the issuing entity", wanted to know if it should make a distinction between qualified institutional investors and retail shareholders.

Advocate General Richard de la Tour advised the ECJ that in its future ruling it should also allow qualified investors to bring forward liability actions and ultimately it should be up to Spain's Supreme Court to take a decision.

Bankia, which is being bought by Caixabank in a deal to create Spain's biggest domestic lender, declined to comment on Thursday.

As part of separate civil proceedings, Bankia has already paid retail investors around 1.9 billion euros in compensation relating to losses they sustained in the IPO.

Several institutional shareholders have also taken legal action against Bankia, with claims for around 30 million euros, a source with knowledge of the matter said.

Bankia said in September that any litigation risks stemming from the IPO had been factored into the Caixabank tie-up.

Shares in Bankia were 0.7% down, while shares in Caixabank were 0.4% lower.

In a separate criminal case last year, former Bankia Chairman Rodrigo Rato and another 33 people were acquitted in a fraud trial over the listing of Bankia.