The former head of the International Monetary Fund (IMF), Rodrigo Rato – who was also a People’s Party (PP) finance minister and a deputy prime minister in Spain – has been acquitted with other defendants of fraud and falsifying accounts during the failed 2011 flotation of Bankia – a symbol of Spain’s banking crisis.
Spain’s National Court concluded that Bankia’s stock listing had received approvals ‘from all necessary institutions’.
Back in 2011, more than 300,000 small shareholders bought share packages for a minimum of 1,000 euros, attracted by a major advertising campaign and the profits presented by the bank.
But in 2012, after a disastrous year that saw its share value collapse, the bank admitted that in the year it listed it had actually made a loss of close to three billion euros.
Thousands of small-scale investors lost their money. The Spanish state had to nationalise the bank and inject 22 billion euros to keep it from collapsing at a time when the Spanish economy was deep in crisis.
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The state then had to borrow 41 billion euros from the European Union to keep the rest of Spain’s banking sector afloat, with investor confidence badly shaken.
Rato, 71, who led the IMF from 2004 to 2007, then led the merger in 2010 of Caja Madrid, which he headed at the time, and six other struggling regional savings banks into Bankia.
The image of a smiling Rato ringing the bell and sipping champagne in July 2011 to mark the start of Bankia’s listing has since become a symbol of the scandal.
Rato was accused of falsifying the books and fraud to the detriment of investors. He faced a jail sentence of eight and a half years if he had been convicted. The 33 other people and entities also on trial, among them Bankia, were also cleared.
In its ruling, the court said that the prospectus for the listing contained ‘more than sufficient information for investors … to form a reasoned opinion on the value of the company’ and that it also contained a ‘comprehensive and clear description of the risks’.
It argued that the procedure which led to Bankia’s listing was ‘intensely and successfully supervised’ by the Bank of Spain and financial market authorities which approved it.
During the trial, Rato said Spain’s central bank was fully aware of everything that went on at the lender.
‘The Bank of Spain would tell us “do this, do that”. And if at some point we did something they didn’t feel was good, it said no,’ he had told the court.
‘During my two years and three months heading up Caja Madrid and Bankia, the Bank of Spain never warned me, orally or in writing, that we weren’t respecting its recommendations,’ Rato had said in court.
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A group of activists called 15MpaRato had filed one of the first lawsuits that led to the trial. The group called the ruling ‘shameful’ and said the listing was a ‘scam’.
The Spanish state, which still holds just under 62% of Bankia, has recognised that it will never be able to recover much of the money it disbursed.
The boards of Bankia and CaixaBank recently approved a merger to create Spain’s biggest domestic bank by assets. The Spanish state will hold a 16.1% share in the new group.
Since October 2018, Rato has been serving a four-and-a-half-year sentence for misusing company credit cards for personal expenses while working at Bankia between 2010 to 2012.
Rato was economy minister and deputy prime minister in the People’s Party (PP) government of Jose Maria Aznar from 1996 to 2004, before going on to head the IMF.
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