MADRID, March 25 (Reuters) - A Madrid court has thrown out a lawsuit brought by Spanish power company Iberdrola against state-controlled lender Bankia over its ill-fated 2011 stock market listing, according to a ruling seen by Reuters.
The case was key for Bankia, as a successful complaint could have encouraged more companies and institutional investors to seek compensation after they lost money in the initial public offering (IPO).
So far the bank, which had to be bailed out less than a year after going public, has only offered compensation to retail investors who purchased shares in the IPO, after many complained they were misled into buying the stock.
Hundreds of thousands of ordinary Spaniards, including many Bankia clients, bought the shares and were subsequently almost wiped out.
Iberdrola was one of several Spanish companies that also invested in the IPO. It had sought 12.4 million euros ($13.4 million) in compensation out of its 70 million euro investment, while in total institutional investors bought into the listing for more than 1.2 billion euros.
The Madrid court said in its ruling, dated March 23, that Iberdrola would have had a better understanding than retail investors of Bankia's and Spain's situation in 2011, when worries over a real estate crash were mounting.
"As opposed to retail investors, Iberdrola knew, for example, that demand was weak among foreign institutional investors who were worried about country risk in Spain at that point," the ruling said.
A source at Iberdrola said the company was likely to appeal the ruling.
Bankia's IPO is separately still being investigated by Spain's High Court, which is trying to establish who knew what about the state of the bank when it was listed.
Former Bank of Spain governor Miguel Angel Fernandez Ordonez was called to testify in the long-running probe earlier in March. He denied responsibility for the failure of the listing and said he was unaware of warnings from his inspectors.
$1 = 0.9262 euros Reporting by Sarah White and Jose Elias Rodriguez; Editing by Mark Potter