A trio of senior Bank of Spain officials have resigned after they were named as targets of an investigation into the central lender’s role in the country’s recent financial crisis.
The high court is examining how officials acted in the build-up to the 2011 public listing of Bankia, the country’s fourth-largest lender and the result of a merger of seven struggling savings banks. The listing was a disaster, eventually leading to the bank receiving a €22 billion state bailout and becoming a symbol of Spain’s financial woes.
Mariano Herrera and Pedro Comín, who held leading supervisory posts in the central bank, stepped down on Tuesday after it emerged they were being investigated by the high court, as did Pedro González, head of an inspection department in the bank.
Investigation
The former Bank of Spain chairman, Miguel ángel Fernández Ordóñez, was also named as the subject of investigation, along with Julio Segura, former president of the CNMV stock market watchdog. Both men held those posts at the time Bankia was listed.
All are scheduled to appear in court in March.
Rodrigo Rato, the former IMF managing director and chairman of Bankia in 2011, has already been under investigation for allegedly falsifying the bank’s accounts ahead of the listing. But now, Spain’s public institutions are coming under scrutiny.
The court cited internal Bank of Spain emails which had apparently warned the institution’s hierarchy about “the lack of viability of the structure designed for the listing and of the major damage it was going to cause shareholders, investors and all contributors…”
Bankia was floated at €3.75 a share, a price that dropped to around €1within a year. Last year, the bank agreed to pay back €1.5 billion to 200,000 small investors who lost money in the listing. The national Audit Court published in January an estimate that the rescue of banks had cost the country €61 billion.
Crisis
In a separate case, the trial recently finished of Mr Rato and 64 others for their role in a shady system of credit cards that were handed out to executives of Bankia and one of its predecessors, Caja Madrid. A verdict is expected soon.
A broader wave of legal action against those suspected of unleashing the financial crisis is currently underway.
On January 16, five senior executives of the former Novacaixagalicia bank were imprisoned on two–year sentences for enriching themselves while bankrupting the lender. It was the first jailing of bankers involved in the recent crisis.
But beyond the many legal cases open against former bankers, pressure has been building for a probe into the apparent failure of Spain’s institutions to identify underlying weaknesses ahead of the crisis.
After initial resistance from the governing Popular Party (PP) and the Socialists, a proposal by the leftist Podemos for the creation of a parliamentary investigation into the banking crisis and its related bailouts has been accepted.
