José Ignacio Goirigolzarri, the new chairman of Bankia, has defended his predecessor, Rodrigo Rato, after Spain’s third-largest lender by assets succumbed to the largest bank rescue in the country’s history.
Mr Goirigolzarri said Mr Rato, former managing director of the International Monetary Fund and a former Spanish finance minister, had been forced to manage the bank “in a background of enormous turbulence and great difficulty”.
“He had to lead at a very complicated moment with tremendously demanding objectives,” Mr Goirigolzarri said.
Mr Rato’s time at Bankia has come under scrutiny since the process of its nationalisation started earlier this month, culminating in a €19bn injection from the government on Friday, which takes the total received by Bankia to €23.5bn.
The bank, which was listed on the Madrid stock market in July last year, also restated its accounts for 2011, reporting a €2.97bn loss, having in February declared a €309m net profit.
Its auditor, Deloitte, has refused to sign off on the accounts.
Bankia’s credit rating was on Friday downgraded to junk status by Standard & Poor’s, the credit rating agency.
Madrid has said the rescue money will be paid for by the Frob, the state bank rescue fund that has already spent €14.8bn on injecting funds into struggling lenders and seizing several to auction off to rivals, as it battles to reassure the international investors it needs to borrow from that it is on the path to economic recovery.
The rescue has reignited concerns Spain could be forced to seek outside help to recapitalise its banks, a possibility repeatedly denied by the government of Mariano Rajoy.
Mr Goirigolzarri, a former BBVA chief executive who was picked by the government after it ousted Mr Rato earlier this month, said he had not taken the role to “flush out any responsibility” of his predecessors.
On Friday night the new chairman removed the board of Bankia that had served under Mr Rato, replacing one dominated by politicians with directors from companies including Telefónica and Red Electrica.
Bankia’s stock market listing last northern summer was at the time endorsed by Spain’s then socialist government and the Bank of Spain, and marketed to thousands of small retail savers. They have lost over 40 per cent of their investment and are expected to lose more when the shares restart trading on Monday.
Bankia was formed from a merger of seven regional savings banks with strong ties to the ruling Popular party, including Caja Madrid and Bancaja of Valencia, with Mr Rato, a member of the PP placed at the helm.
The €19bn provided by the government raises the total amount injected into Spain’s banks since the crisis began to more than €33bn, or about 3 per cent of gross domestic product. In February Madrid said no additional money would be needed by the sector.
Mr Goirigolzarri said Bankia and its parent group BFA would seek to sell their combined industrial holdings, which include stakes in Iberdrola and International Airlines Group, the holding group of British Airways and Iberia, among others.
In the recapitalisation plan BFA, which at the time of the listing controlled just under half of Bankia, identified a €15.6bn capital shortfall in its loan book and property portfolio, €3.9bn in the accounted value of its industrial holdings and €2.7bn in booked tax assets. The combined gross figure of €22.2bn is reduced to the €19bn needed in state aid after tax and other accounting of capital.
Bankia will receive €12bn of that figure, which will bring the capital ratios of both parts of the bank up to 9.5 per cent, in line with healthier peers.
Aid taken by BFA in 2010 of €4.5bn will be converted into common equity in June, while BFA will receive the new state money in July before Bankia is recapitalised in the last quarter of the year.