Rato offers to waive payoff package from Bankia

Former Bankia chairman Rodrigo Rato has offered to forego the 1.2 million euros he is due from the nationalized bank in exchange for the lender not enforcing a clause in his contract that bars him from working for a rival for two years after his departure.

The issue of compensation for the managers of failed banks that have had to be bailed out with taxpayers’ money has proved controversial. Many minority shareholders have also seen their investment in Bankia’s initial public share offer in July of last year decimated.

Rato made his proposal in a letter to his successor, José Ignacio Goirigolzarri, to which Spanish newswire Efe has had access.

Shortly after Goirigolzarri took over, Bankia and its parent Banco Financiero y de Ahorro (BFA) restated their financial results for last year to show record losses for a Spanish bank where previously profits had been reported. Bankia subsequently estimated it would need an injection of 19 billion euros to clean up its balance sheet, which has been badly mauled by the bank’s exposure to Spain’s ailing real estate sector. The 19 billion euros would come on top of a previous 4.4-billion-euro loan from the state Orderly Bank Restructuring Fund (FROB), which is to be converted into common stock.

The centrist UPyD party and the Manos Limpias pressure group have filed lawsuits against Rato, a former economy minister in the government of José María Aznar and an ex-managing director of the IMF, and other top Bankia managers alleging fraud and falsification of documents during their stewardship of the bank. The case is in the hands of High Court Judge Fernando Andreu.

The question of Rato’s compensation is due to be dealt with by Bankia’s nominations and retributions committee.