Sunday

25th Feb 2018

Spain MPs to probe €60bn bank bailouts

  • MPs voted unanimously to create a commission to investigate the financial and banking crisis. (Photo: PP/Flickr)

Spanish MPs have voted unanimously to set up a commission to examine mistakes that led to a €60 billion bank bailout in 2012.

In a rare display of unity in Spain's fragmented parliament, all parties signed up to a deal on Wednesday (22 February) to “create a commission to investigate the financial and banking crisis, the listing of savings bank Bankia and its later rescue, the action taken by regulators and the weaknesses, needs and challenges of the financial system”.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • Bankia's fall triggered an EU and IMF €60 billion bailout of the Spanish banking sector. (Photo: Arturo R Montesinos)

In 2012, a government led by current centre-right prime minister Mariano Rajoy sought a bailout from the EU and International Monetary Fund (IMF) after Bankia requested €22.5 billion in aid just a year after its flotation under the previous Socialist government. Dozens of other savings banks also needed state cash.

The cross-party deal this week came after the opposition Socialists, anti-austerity group Unidos Podemos and Catalan party Republican Left all lodged separate petitions for commissions.

Expected to hear evidence from April for about six months, the parliamentary commission will in particular look at the controversial listing of Bankia, the largest bank bailout still in public control.

The plunging of Bankia's share price and the bank's subsequent nationalisation wiped out its shareholders, many of whom were small savers encouraged by bank managers to buy shares as a safe investment.

"We need to clarify the political responsibilities for the crisis and to ask why regulators didn't react earlier," Toni Roldan, economics spokesman in the parliament for liberal party Ciudadanos, told EUobserver.

Ciudadanos and anti-austerity party Podemos gained seats in the national parliament for the first time in December 2015, mainly because voters blamed the two main political parties, the ruling Popular Party (PP) and the Socialist Party, for the crisis and corruption scandals.

The PP and the Socialists presided over a decade-long housing bubble, fuelled by cheap credit handed out by savings banks whose boards included politicians. "Fifty percent of the banking system was controlled by political parties ... extending credit to their friends," said Roldan. "The former savings banks gave credit to local mayors and real estate developers."

In recent years, Spain's courts have looked into hundreds of corruption allegations linked to the property boom. Between July 2015 and September 2016, 399 people were convicted of corruption-related offences like embezzling public money, the General Board of Judicial Power (CGPJ), which oversees Spain’s judiciary, said in a report last month.

The creation of the parliamentary commission comes after the high court said last week it would question the former governor of the Bank of Spain, Miguel Angel Fernandez Ordonez, over Bankia's regulation.

Five other officials at the central bank and two former senior managers of stock market regulator, the CNMV, will also be questioned.

Many think Fernandez Ordonez, appointed by the Socialist government of Jose Luis Rodriguez Zapatero, should never have allowed the bank to list at all.

The court is also investigating Rodrigo Rato, a former PP economy minister and IMF chief, who was chairman of the bank when it listed.

Full confidence

Once the parliamentary commission is formed, the political parties will have to agree on the list of people members of parliament should question. Fernandez Ordonez and Rato could be high on their list.

Economists working for the central bank are also likely to be called to ask about internal emails cited in the high court investigation which suggest the bank was not fit to be listed.

"The bank's own inspectors told the directors it wasn't fit for a listing," Nacho Alvarez, economics spokesman for Podemos told EUobserver.

In a statement last week, the Bank of Spain said its board had "full confidence" in all the bank officials summoned by the high court and said the central bank acted "in accordance with regulations, the defence of financial stability and the public interest".

Opposition parties hope the PP government will take note of the commission's conclusions. "The commission's deliberations and conclusions are going to get huge media attention," said Alvarez, suggesting that the government, which is in a minority in the parliament, could feel a pressure to do so.

'The greatest scandal'

However, some Spaniards are sceptical about whether the commission will result in action to prevent bank abuses and a repeat of the crisis.

Consumer association ADICAE, which represents 200,000 consumers, including many who were mis-sold products as banks became desperate to reverse losses, says commission recommendations in Spain have been ignored in the past and it will continue to push cases in the courts.

"This investigation should have happened a long time ago," said ADICAE spokesman Jose Angel Palacios.

"We're a bit sceptical but it is an opportunity for Spaniards to learn about the greatest scandal we've ever had," he said, insisting that the bank crisis resulted in cuts in education and the health service to repay the €60 billion bailout.

EU 'finance ministry' pardons Italy and Spain

Italy, Portugal, and Spain are unlikely to face sanctions for breaking EU budget rules, the European Commission has said, in what it described as a “political” decision by a kind of “common finance ministry”.

Corruption report: Hungary gets worse, Italy makes progress

Italians, Czechs and Latvians perceive less corruption than a few years ago in Transparency International's annual ranking. The Berlin-based NGO said Finland was a 'worrying case', whilst Bulgaria - which holds the EU presidency - is EU's most corrupt.

Corruption report: Hungary gets worse, Italy makes progress

Italians, Czechs and Latvians perceive less corruption than a few years ago in Transparency International's annual ranking. The Berlin-based NGO said Finland was a 'worrying case', whilst Bulgaria - which holds the EU presidency - is EU's most corrupt.

News in Brief

  1. EU calls for immediate ceasefire in Syria
  2. UK's post-Brexit vision is 'pure illusion', Tusk says
  3. EU leaders express solidarity with Cyprus in Turkey drill row
  4. EU to double funding for Sahel forces
  5. EU parliament president: 'The immigration problem is Africa'
  6. May to unveil EU departure strategy next week
  7. Pregnant workers may be dismissed, EU court rules
  8. Romanian minister demands anti-corruption prosecutor fired

Stakeholders' Highlights

  1. ILGA EuropeAnkara Ban on LGBTI Events Continues as Turkish Courts Reject NGO Appeals
  2. Aid & Trade LondonJoin Thousands of Stakeholders of the Global Aid Industry at Aid & Trade London
  3. Macedonian Human Rights Movement Int.European Free Alliance Joins MHRMI to End the Anti-Macedonian Name Negotiations
  4. Mission of China to the EUChina-EU Tourism Year to Promote Business and Mutual Ties
  5. European Jewish CongressAt “An End to Antisemitism!” Conference, Dr. Kantor Calls for Ambitious Solutions
  6. UNESDAA Year Ago UNESDA Members Pledged to Reduce Added Sugars in Soft Drinks by 10%
  7. International Partnership for Human RightsUzbekistan: Investigate Torture of Journalist
  8. CESICESI@Noon on ‘Digitalisation & Future of Work: Social Protection For All?’ - March 7
  9. UNICEFExecutive Director's Committment to Tackling Sexual Exploitation and Abuse of Children
  10. Nordic Council of MinistersState of the Nordic Region 2018: Facts, Figures and Rankings of the 74 Regions
  11. Mission of China to the EUDigital Economy Shaping China's Future, Over 30% of GDP
  12. Macedonian Human Rights Movement Int.Suing the Governments of Macedonia and Greece for Changing Macedonia's Name

Latest News

  1. EU agrees budget to focus on defence, security and migration
  2. EU leaders nix transnational lists, cool on 'Spitzenkandidat'
  3. Regions chief: calls for smaller EU budget are 'impossible'
  4. Election fever picks up This WEEK
  5. EU-Morocco fishing deal casts doubt on EU future foreign policy
  6. EU leaders put 'Spitzenkandidat' on summit menu
  7. European far-right political party risks collapse
  8. The key budget issues on EU leaders' table

Stakeholders' Highlights

  1. Swedish EnterprisesHarnessing Globalization- at What Cost? Keynote Speaker Commissioner Malmström
  2. European Friends of ArmeniaSave The Date 28/02: “Nagorno-Karabakh & the EU: 1988-2018”
  3. European Heart NetworkSmart CAP is Triple Win for Economy, Environment and Health
  4. European Free AlllianceEFA Joined the Protest in Aiacciu to Solicit a Dialogue After the Elections
  5. EPSUDrinking Water Directive Step Forward but Human Right to Water Not Recognized
  6. European Gaming & Betting AssociationGambling Operators File Data Protection Complaint Against Payment Block in Norway
  7. European Jewish CongressEJC Expresses Deep Concern Over Proposed Holocaust Law in Poland
  8. CECEConstruction Industry Gets Together to Discuss the Digital Revolution @ the EU Industry Days
  9. Mission of China to the EUChina-EU Relations in the New Era
  10. European Free AlllianceEnd Discrimination of European Minorities - Sign the Minority Safepack Initiative
  11. Centre Maurits Coppieters“Diversity Shouldn’t Be Only a Slogan” Lorant Vincze (Fuen) Warns European Commission
  12. Dialogue PlatformWhat Can Christians Learn from a Global Islamic Movement?