Bank of Spain was too passive over Bankia disaster, says report

The State Comptroller's Department has issued a report that is critical of the Bank of Spain's supervision of the nationalized lender Bankia/BFA and of the savings banks that helped found it, particularly Caja Madrid, in 2011.

The document commissioned by the Anti-corruption Prosecutor's Office speaks of watered-down criticism by the central bank of the management of the lenders involved in Bankia/BFA, which it said culminated in a series of recommendations that did not reflect the banking group's problems "in all their crudeness."

Bankia, which was formed by a merger of seven savings banks, was taken over by the Bank of Spain in May 2012, less than a year after it was floated on the stock market. The banking group eventually suffered a loss of 21.238 billion euros last year. Bankia received the bulk of the some 40 billion euros borrowed from its European partners to clean up its banking sector.

Referring to Caja Madrid, the report says: "The written recommendations of December 2006 did not begin to be implemented until the end of 2008, a period during which the Bank of Spain made no follow-up on its inspection in 2006, which, given the significance of the problems that were starting to arise, would have been recommendable."