Bankia shares plunge again

Shares in Spanish bank Bankia have continued their dramatic decline on concerns over the firm\'s finances. The share price was down another 25% on Thursday, taking losses for May to 50%. Spain denied a report in the El Mundo newspaper that customers had taken more than 1bn euros ($1.3bn; £800m) out of the bank, which is set to be part-nationalised, over the past week. The government, meanwhile, has had to pay sharply higher rates of interest to borrow money on the bond markets. In total, it raised 2.5bn euros ($3.2bn; £2bn) through issuing a number of different types of bonds. On bonds due to be paid back in January 2015, it had to pay an interest rate of 4.373%, up from 2.89% in April. Governments have to pay higher returns to investors, or yields, as lenders become more concerned about a country\'s ability to pay the money back. On debt maturing in April 2016, Spain had to pay an interest rate of 5.106%, up from 3.374% on 15 March. \"The auctions have gone OK, probably better than the market feared,\" said Peter Chatwell, interest rate strategist at the French bank, Credit Agricole. \"The market should stabilise for the moment as this is another successful funding round from Spain,\" he said. On Wednesday, Spain\'s Prime Minister Mariano Rajoy warned that borrowing costs could become \"astronomical\" as fears about the weakness of its banks persist. Spain\'s economy minister denied reports of a surge in withdrawals from Bankia in recent days. \"It\'s not true that there is an exit of deposits at this moment from Bankia,\" said Fernando Jimenez Latorre. On Wednesday, Bankia, which was formed by a merger of seven troubled regional savings banks, said it was delaying the release of its first quarter results. The bank reported only provisional results for the first quarter, without figures for net profit or bad debt provision. More information would be forthcoming \"once we have the definitive annual accounts for 2011 and the audit report on them,\" it said. The markets fear further bad debt news from the bank. Bankia is already setting aside 4.7bn euros, the highest among Spain\'s banks, to cover loans that could go bad. The Spanish government is currently choosing independent auditors to look at the property debts held by Spanish banks, as part of the government\'s plan to strengthen the banking system. A government spokeswoman said on Thursday that officials were still receiving pitches from interested parties. Alberto Gallo, head of credit research at Royal Bank of Scotland, told the BBC: \"The problem is Spanish banks are too large for the government to bear all of their weight. \"You [the Spanish government] need to make a choice and just protect stronger banks, otherwise Spain will go the way of Ireland - having to do a lot of austerity and potentially incurring losses for bank bondholders.\"