A COMMITTEE has accused the Bank of Spain of committing a, “serious irregularity,” which contributed to Spain’s financial crisis.
A parliamentary investigation committee looking into the Bankia case in which 300,000 investors lost money after the bank allegedly falsified its financial statements, said a decision by the Bank of Spain could have played a part in the fiasco.
The committee claimed there were, “nefarious consequences,” after the Bank of Spain allowed, “Caja Madrid, Bancaja and five other savings banks,” not to publicly recognise their financial losses.
According to the committee, the consequences included bankers being receiving bonuses despite the companies making losses and banks being able to post favourable financial statements before Bankia was floated on the Stock Exchange in 2011.
More than 300,000 investors bought shares for a minimum of €1,000 following a major advertising campaign by Bankia in 2011, assuring customers of its profitability. After shares dropped significantly in value in 2012, the bank was forced to admit it had actually made a near €3 billion loss the previous year.
Spain’s Central Government later bailed Bankia out, investing more than €22 billion to save the failing institution.
In turn, the EU was then forced to intervene to save Spain’s banking sector.