Judge finds signs of “criminality” in loan to ex head of employers group

An investigative judge in Madrid sees “criminal evidence” in the financial relationship between the former head of savings bank Caja Madrid and the ex-chief of the employers’ association CEOE.

The judge is investigating an irregular loan of 26.5 million euros made by Caja Madrid to Díaz Ferrán when the latter was co-owner of Grupo Marsans, a tourism multinational that went bankrupt in 2010. Díaz Ferrán was also a member of the board of Caja Madrid at the time, and is currently in jail for fraud. The loan was never repaid.

Judge Elpidio José Silva holds that “far from adhering to adequate practices in bank management, they project a very deteriorated image of risk management and operations at a lender of the relevance of Caja Madrid.”

In testimony to the court last December, Mario Blesa – then head of Caja Madrid- asserted that loans under his administration were approved “with all due guarantees.” According to the judge, however, the facts suggest it was “rather the opposite” when it came to loans made out to Díaz Ferrán.

In 2010, Madrid’s premier savings bank was forced to merge with several other struggling regional lenders to form Bankia, which itself was nationalized in May 2012. Since the economic crisis began, a majority of Spain’s savings banks have been forced to merge due largely to overexposure to real estate and credit policies that were often based on ties to regional politicians rather than objective assessments of default risk.