An internal report commissioned by the Bank of Spain has lambasted the central lender’s supervision of the financial sector, accusing it of ignoring malpractice, failing to control excessive payouts and of connivance in illegal activity by the banks.
“During the inspection work , there are relatively frequent signs of conduct that could be deemed criminal,” says the report. “Its normal way of reacting to evidence of criminal wrongdoing is to look the other way.”
The document, not yet officially made public, has been cited by national newspaper El País and was drawn up by the association of inspectors of the Bank of Spain.
Failure to supervise
The governor of the central bank, Luis Linde, who took office in June, commissioned the report at the instigation of Brussels. The brief was to look into the institution’s failure to supervise a sector hampered by bad debt, incompetence and corruption.
Spain’s financial system started to unravel in the first half of 2012 as the extent of its exposure to toxic assets from a collapsed property bubble became apparent.
The biggest casualty was Bankia, the country’s fourth-largest lender, which was partly nationalised and received a massive injection of public funds. Spain has since requested about €40 billion in capital for its struggling banks from the EU.
Fraud investigation
Among those being investigated for fraud is former Bankia president Rodrigo Rato, previously an International Monetary Fund managing director who was also economy minister in the government of José María Aznar.
Another 33 former colleagues of Mr Rato at Bankia are also facing probes, as are former senior figures at several regional savings banks.
Many Spaniards are angry that those they blame for thecrisis were not brought to justice earlier. The Bank of Spain report suggests cosy relations between politicians, banks and the central bank have been a major problem.
The report cites the case of Alfredo Sáenz, chief executive of Santander, who was paid an estimated €13 million in 2012, despite being found guilty the previous year of fraud when he was president of Banesto bank.
