Run on Nationalised Spanish Bank Sees Customers Withdraw €1Billion… as French Government Slashes its Own Pay by 30%

By Daily Mail Reporter – May 17, 2012

http://tinyurl.com/7cmp8wc

• Shares in Bankia, Spain’s fourth largest bank, fall 27% after media reports

• Greece forms government, but will dissolve it tomorrow for new election

• Francois Hollande slashes pay to ‘highlight difference’ with Sarkozy

A €1billion run on a recently nationalised Spanish bank has sparked further fears that the 17-nation eurozone is about to implode.

European markets fell as fears of a continent-wide contagion from goverment-less Greece’s economic crisis also spread.

Shares in Bankia, Spain’s fourth biggest bank formed in 2010 through a merger of seven struggling regional savings institutions, today plummeted by 27 per cent.

The pan-European FTSE 300 index was down 0.9 per cent at 984.22 points by 10.26.am, close to a four-and-a-half-month low of 983.95 points reached yesterday.

Spain’s benchmark IBEX index fell nearly 2 per cent to its lowest level since mid-2003.

It came following a report in El Mundo newspaper that its customers had withdrawn more than €1billion from their accounts over the past week.

It added to losses incurred yesterday after the European Central Bank said it had stopped providing liquidity to some Greek banks because they had not been successfully recapitalised.

Greece is set to hold fresh elections on June 17 after voters rejected austerity measures imposed on it by the European Union and the International Monetary Fund, which has heightened fears it will have to leave the eurozone.

Investors are also worried by the possibility of contagion from a Greek exit from the euro spreading to other countries such as Spain or Italy.

‘It’s not Greece leaving the euro that is the major issue, it’s the domino effect,’ said John Bearman, chief investment officer at British firm Thomas Miller Investment, which manages roughly €3billion worth of assets.

Read the rest of the article here: http://tinyurl.com/7cmp8wc

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