Bankia, the Spanish lender forged from the merger of seven savings banks, got a cool reception on its first day of trading, closing unchanged at its listing price of €3.75 a share.
Madrid's Ibex-35 index generally closed up 3.06% at 9,732.8 points with banks leading gains. Shares in Santander, Spain's biggest bank, ended up 5.02%.
The government has pushed Bankia and smaller rival Banca Civica to list their shares to shore up capital after the collapse of a property boom in 2008 left lenders heavily exposed to bad debts.
Bankia's stock market flotation is seen as a key test of Madrid's strategy to strengthen Spanish banks.
The bank, run by former IMF chief and Spanish economy minister Rodrigo Rato, priced its shares at €3.75, a 60% discount to book value, to attract shareholders amid market tensions over the European sovereign debt crisis. It had originally planned to sell shares at €4.41-5.05.
Banca Civica, which was forged from the merger of four savings banks, set the price for its stock market debut tomorrow at €2.70, the bottom of the marketed range and also a discount of around 60% to book value.
Both Bankia and Banca Civica passed the stress tests published on Friday by the European Banking Authority to see if they can survive a theoretical slide in stock, bond and property prices during a two-year recession. But they only just achieved the bare minimum requirement of rock solid core Tier One capital ratio of 5% of total assets.
Five Spanish banks were among the eight European lenders which failed the stress tests. The government and the Bank of Spain said the test did not take into account huge provisions made by Spanish lenders to prepare for an economic downturn and they stressed that none of the banks needed extra money.
The plight of Spain's lenders, especially regional savings banks which account for about half of all lending in the country, has fed market concerns that the nation could need an international bailout from the European Union and the International Monetary Fund as has been the case for Greece, Ireland and Portugal.
Bankia announced in January it intended to list on the stock market as a way to meet higher capital requirements for the Spanish banks. It moved its riskier assets, such as bad property loans, to an unlisted unit set up by the group, Banco Financiero y de Ahorros, to prepare for the listing.
Bankia was formed from a merger of heavyweight Caja Madrid and six smaller regional savings banks. It is Spain's fourth-biggest bank after Santander, BBVA and CaixaBank.
Under the new regulations, Spanish banks must raise the proportion of core capital they hold to 8% of total assets from 6% - or 10% if they are unlisted.
