Former Bankia board focus of criminal probe

THE FOCUS on why nationalised Spanish lender Bankia went ahead with a stock market listing intensified yesterday as the country’s national court opened a criminal investigation into the float naming 33 former board members as suspects.

The probe, launched following a complaint by small Spanish political party Union Progreso y Democracia, accuses Bankia, its parent company and 33 former board members of fraud, misappropriation of funds and the falsification of its 2011 annual results.

It is the third criminal investigation into Bankia, but the first to cite specific individuals including former executive chairman Rodrigo Rato, once head of the IMF, as suspects.

Chief operating officer Francisco Verdu, named as a suspect, resigned following disclosure of the probe. The other 32 had resigned shortly after Bankia was bailed out.

Under Spanish law the crimes carry jail sentences of up to six years, but analysts yesterday said convictions were unlikely.

The bank had to be bailed out less than a year after its float, with hundreds of thousands of Spanish retail investors seeing their investments all but wiped out.

The criminal probe means attention is likely to turn to the float’s advisers and underwriters.

Lazard, where Rato had worked after leaving the IMF, and STJ Advisors were originally appointed to advise on the float.

The syndicate of banks selling shares in Bankia’s initial public offering was led by Bank of America Merrill Lynch, Deutsche Bank, JPMorgan and UBS. Other banks had smaller roles.

A source at a bank involved in the float said yesterday it had to hand over files on the deal.

However, a banker at one of the global coordinators of the float said he believed they were safe from legal challenges because risks were explained to investors in the pre-float prospectus. “It’s like attacking the people who sold the tickets for the Titanic,” he said.