Supreme Court orders Bankia to pay up over “inaccuracies” in prospectus
Decision could pave the way for thousands of other investors to get their money back
In a decision that could affect tens of thousands of investors in Spain, the Supreme Court has ruled that Spanish lender Bankia has to return the money spent by two citizens on shares in the bank.
The ruling is based on the fact that the prospectus advertising the bank’s stock market launch contained “serious inaccuracies” regarding the true state of the lender’s finances.
Aware that it has been losing most of the court cases brought by angry customers, Bankia has already put aside over €1.8 billion for this contingency
Bankia had to be taken over by the government’s Orderly Bank Restructuring Fund (FROB) in May 2012, less than a year after listing on the stock exchange.
The bank came unstuck because of its overexposure to the ailing real estate sector. Before being taken over, the group initially reported a profit for 2011. However, after it was nationalized, its accounts were revised and the state had to inject over €22 billion to shore up its balance sheet, with the bank receiving the bulk of a European bailout.
The Supreme Court’s decision affects two plaintiffs who invested €9,997 and €20,868 respectively, but it also paves the way for other investors who lost money on these shares to pursue legal action.
Aware that it has been losing most of the lawsuits brought by angry investors, Bankia has already put aside over €1.8 billion for this contingency.
Bankia is the result of the merger of seven savings banks, including Caja Madrid. Rodrigo Rato, a former Popular Party government official who headed both Caja Madrid and Bankia, is currently the target of several criminal investigations in connection with his tenure at both lenders.
