Ex-Caixa Catalunya chief defends boardroom bonuses at failed bank

The former chairman of Caixa Catalunya, Narcís Serra, on Monday defended the bonuses, pay hikes, pension rights and severance packages the board of directors of the nationalized savings bank granted themselves at a time when the lender was floundering because of its over-exposure to the ailing real estate sector.

After appearing in a Barcelona court on Monday as an official suspect in a case of criminal mismanagement, the former cabinet minister in the Socialist government of ex-Prime Minister Felipe González described the payments made to himself, the former general manager of the now-nationalized lender, Adolf Todó, along with 52 other board members, as “legal” and “fair.”

“In a moment of so much social tension in which so many things are happening, it is important for the judge to distinguish between those who acted in accordance with the law, and those that did not,” Serra, who has also served as the mayor of Barcelona, said.

More than hundred people who lost large amounts as a result of preferred shares sold to them by the savings bank protested outside the door of the court where the hearing was held. Some of them managed to get access to landing in the court building from which two firecrackers were thrown. “Hands up, this is a stick-up!” they shouted. Serra and Todó had arrived half-an-hour earlier.

State attorney Fernando Maldonado claimed the retributions and emoluments received by the bank’s top management were “disproportionate and divorced from the real situation” of the lender in the course of a “serious economic crisis.”

During a Caixa Catalunya board meeting held in January 2010, the bonuses of Todó and his number two, Jaume Masana, were raised by 50 percent, while their basic salaries were increased by the same amount in another meeting held in October.

The prosecutor alleged that the actions of the 54 board members “contributed to the serious financial crisis” of the savings bank. He also said the pension rights and severance packages awarded to Todó and Masana were out of proportion. Todó earned four million euros and had acquired economic rights worth 8.2 million more.

The officials were dismissed when the state’s Orderly Bank Restructuring Fund (FROB) took control of the savings bank. The FROB has injected over 12 billion euros of taxpayers' money into the lender's commercial banking arm, Catalunya Banc.

The bank is in the process of laying off some 2,100 of its 7,200-strong workforce.