In December 2010, Bank of Spain inspectors delivered a report to their bosses about Caja Madrid savings bank that was grim: The bank faced losses of almost 5 billion euros ($6.8 billion) and needed new leadership.
El Pais, Spain’s leading daily newspaper, ousted editor Javier Moreno who last year published documents purporting to show details of a secret slush fund for senior officials of the governing People’s Party.
Five days before Christmas, ex-Deputy Prime Minister Rodrigo Rato was asked by a prosecutor probing the collapse of Bankia SA whether he’d done business with Jaime Castellanos, chairman of Lazard Ltd.’s Spanish unit.
To shore up the Spanish banking system, Caja Madrid Chairman Rodrigo Rato may offload a stake in a water ride inspired by the Greek god Triton, a restaurant modeled after a Roman villa and an Egyptian-themed fun house called the Piramide del Terror.
Bankia SA former Chairman Rodrigo Rato said the new head of Spain’s third-biggest lender overstated losses at the institution while requesting a “brutal” recapitalization by the state, El Mundo reported.
Spain’s Bankia group said a government-ordered clean-up of its real estate holdings would require 5.1 billion euros ($6.7 billion) in provisions and extra capital, and that it can meet the demands alone.
Spain’s effort to bolster its banks, stanch spending and stave off sovereign debt contagion will hinge in part on the initial public offering of Bankia, a lender formed from the merger of seven savings banks.