CAM ignored Bank of Spain warnings on real estate
Savings bank increased its expose to property sector rather than reduce it as advised
The Bank of Spain warned failed savings bank Caja Mediterráneo (CAM) on a number of occasions about its exposure to the bloated real estate sector, but its management turned a deaf ear to calls for it to remedy the situation, the former head of the central bank’s supervision department, Julián Atienza, said Wednesday.
The central bank issued its warnings to CAM’s management in 2004, 2005 and 2006, during which period the savings bank’s exposure to the real estate sector rose from 20 percent of its total loan portfolio, as of the end of 2004, to 25 percent in 2005 and 30 percent in 2006. “It’s not that they didn’t do anything; rather they did the opposite,” Atienza told a commission of the Valencia regional assembly.
CAM, which was taken over by the Bank of Spain’s Orderly Bank Restructuring Fund (FROB) and cleaned up with an injection of taxpayers’ money before being sold to Banco Sabadell for the nominal amount of one euro, is based in the region of Valencia.
Atienza headed the central bank’s supervision department from 2004 until 2008 before being appointed chairman of the FROB when it was created in June 2009 before leaving in September 2011.
Top management at CAM awarded themselves huge severance and pension packages before the lender was taken over by the Bank of Spain.
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