Last updated: June 5, 2013 10:59 pm

Former Caja Madrid head to be held without bail ahead of trial

The former head of one Spain’s largest savings banks will be held without bail as he awaits the outcome of a criminal trial, in the strongest action yet taken against a member of Spain’s financial elite.

A court in Madrid on Wednesday sent Miguel Blesa, the ex-president of Caja Madrid, back to prison – less than a month after he posted a €2.5m bail to avoid spending a second night in jail.

Mr Blesa, 65, is facing trial over his involvement in the 2008 takeover of City National Bank of Florida by Caja Madrid, the lender he presided over at the time. The case against him centres on allegations that Mr Blesa did not conduct appropriate due diligence in advance of the $1.1bn takeover, which resulted in heavy losses for his bank. He is also being investigated for loans made to a collapsed Spanish tour operator.

Caja Madrid later merged with six other savings banks to create Bankia, the lender at the heart of Spain’s financial crisis. Desperately short of capital, Bankia had to be bailed out by the Spanish government last year. It reported a loss of €19.2bn for 2012, the largest in Spanish corporate history.

Mr Blesa had to spend a night in jail last month, but was able to post the €2.5m in bail set by Elpidio José Silva, the judge. The decision to order his detention was not backed by the prosecution.

According to Spanish media reports, Mr Blesa’s lawyers have asked for Judge Silva to be removed from the case, arguing he has shown “enmity” towards their client.

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