BANKING

Judge cites former Caja Madrid chief, other officials over sale of preferred shares

Ex-savings bank chairman also faces probe into purchase of Florida bank

The High Court will investigate the role of former Caja Madrid chairman, Miguel Blesa, and other top officials in the savings bank in the sale of preferred shares by the lender, newswire EFE quoted judicial sources as saying Wednesday.

Judge Fernando Andreu, who is in charge of the probe into the creation of Bankia, the bank that was formed from the merger of seven savings banks led by Caja Madrid, and its subsequent stock-market listing, opened proceedings against Blesa and the other officials following a suit filed by a retired businessman who invested 170,000 euros in preferred shares issued by Caja Madrid.

Among the other officials who will be questioned are Gerardo Díaz Ferrán, the former head of the Spanish Confederation of Business Organizations (CEOE), Spain’s largest employer group. Ferrán is in preventive custody in relation to a series of alleged offenses he committed in his business affairs. Judge Andreu also cited Gonzalo Martín Pascual, Jesús Pedroche, Rodolfo Benito, José Manuel Fernández Norniella and José María Arteta.

Holders of preferred shares issued by Caja Madrid and Bancaja made huge losses on their investments

Holders of preferred shares issued by Caja Madrid and Bancaja – another of the savings banks that merged to form Bankia – and Bankia itself made huge losses on their investments.

Earlier this week, Judge Andreu initiated a criminal probe into the issue of preferred shares to determine if this involved fraud, misappropriation of funds, misleading advertising, criminal mismanagement and price fixing. The magistrate excluded from his investigation the former governor of the Bank of Spain, Miguel Ángel Fernández Ordóñez, and the ex-chairman of the National Securities Commission (CNMV), Julio Segura.

Last week, another judge ordered Blesa to be sent back to jail without bail in connection with alleged irregularities surrounding the acquisition of City National Bank of Florida by Caja Madrid when Blesa was chairman of the savings bank. Judge Elpidio José Silva is also investigating a loan of 26.5 million euros granted to Díaz Ferrán when he was still a director of the savings bank.

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