Shares in Bankia have slid almost 20% after Spain's bank rescue fund said the troubled lender had a negative value of -4.2bn euros (£3.4bn; $5.6bn).
Bankia's parent company, BFA, which is being bailed out, was deemed to be worth -10.4bn euros.
The assessments suggest losses on bad loans are even worse than expected.
Bankia shares will be suspended from Spain's benchmark Ibex index from 2 January until at least after it is recapitalised, the stock exchange said.
The Spanish government-owned bailout fund, which is called the FROB, said that a further 13.5bn euros of rescue money would have to be injected into BFA, on top of the 4.5bn provided by Madrid in September.
The money, which is ultimately provided by the eurozone's bailout fund, is being injected into the bank via the sale of new shares in BFA to the FROB.
By doing this, the FROB increases the bank's capital - its ability to absorb potential future losses on the loans it has made - by putting Spanish taxpayers' money at risk.
The FROB told the BFA it must provide 10.7bn of the rescue money as new capital to Bankia, which will have the effect of diluting the value of the bank's existing shares.
The statement by the rescue fund has made clear that this dilution will be even worse than feared, causing Bankia's shares to drop further on the stock exchange.
Its shares have lost over 80% of their value since the bank was first listed on the Madrid Stock Exchange in July 2011.
Bankia is the largest of a string of Spanish banks to suffer massive losses on the loans it made to property developers and home buyers during the country's property bubble in the past decade.
As well as Bankia, three other banks are currently being patched up by the FROB - Catalunya Banc and NGC of Galicia, as well as Banco de Valencia, which was in such bad shape that it is being sold off to another, privately-owned bank.
Some 10bn euros of the cost associated with the four banks' rescue must be borne by other investors in the banks.
This decision has proved controversial in Spain, as these investors include many ordinary Spaniards, particularly older investors, to whom their banks sold preferred shares - a high-risk form of bank debt - as a savings product.
In Bankia's case, about 350,000 such investors are expected to have most of their money wiped out as part of the bank's rescue, according an unnamed source cited by the Reuters news agency.