Three Bank of Spain officials are stepping down after learning that they are under official investigation by Spain’s High Court as part of a probe into the Bankia flotation fiasco of July 2011. The bank’s Director General of Supervision, Mariano Herrera García-Canturri, his deputy Pedro Comín Rodríguez and Pedro González González, who headed an inspection unit at the lender, are all to leave their posts, according to a statement from the Bank of Spain.
The resignations are expected to be formally submitted on Tuesday, the statement read.
The bank said the decision would not affect its supervisory activities.
The officials’ decision to step down came after Spain’s central high court, the Audiencia Nacional, on Monday issued orders to summon former Bank of Spain governor Miguel Ángel Fernández Ordóñez and other financial watchdog figures for questioning over their role in the Bankia flotation fiasco of July 2011. The court sees “multiple, sufficient and concurrent evidence of criminality” in the way the lender was managed following the merger of seven struggling savings banks, chief of them Caja Madrid, into BFA-Bankia.
Expert reports had warned about excessively generous payment and early retirement policies
Fernández Ordóñez, CNMV securities watchdog ex-chief Julio Segura and several aides were in charge of overseeing the lender at the time of its foundation and initial public offering (IPO) of shares. In July 2011, 48% of Bankia was floated on the stock exchange at €3.75 a share. Less than a year later, that price had plummeted to around €1.00.
The decision to formally investigate the men is a reversal of an earlier decision by anti-corruption prosecutor Alejandro Luzón, who on November 22 refused to move against Fernández Ordóñez, Segura, Fernando Restoy (number two at the CNMV at the time) and Bank of Spain official Pedro Comín. Four other Bank of Spain workers have also been summoned for questioning, including García-Canturri and González González.
But the case has incorporated new evidence in the shape of four internal emails from Bank of Spain inspectors alerting their superiors about the high risks of listing Bankia.
“The complete content of the emails leaves no room for doubt regarding the express, preliminary and resounding information that the leadership of the Bank of Spain received, in advance, about the group’s unviability and the fallacy of the results that it presented,” said the court, which is presided by Judge Antonio Díaz Delgado.
Even though the savings banks’ most toxic assets were moved into BFA and Bankia was left with the healthy ones, just two years after its creation the lender had to be partly nationalized to prevent a complete collapse.
The bank had been run by Rodrigo Rato, a former IMF chief who is now under investigation on several fronts, including tax fraud and the authorization of secret credit cards for board members to use on private expenses.
A review of Bankia’s earnings statement for 2011 showed that instead of turning a profit of €309 million as reported, the lender had in fact lost €4.3 billion before taxes.
Besides the emails, the court is already in possession of several reports in which Bank of Spain inspectors alerted about “serious and reiterated irregularities” in the management of the former Caja Madrid, and about “excessively generous payment and early retirement policies.”
The reports also said that the merger of the seven savings banks was not a viable solution to end the troubles affecting the industry. And further reports by Bank of Spain-designated experts held that Bankia’s IPO prospectus contained fraudulent information.
English version by Susana Urra.