Hunt for those at fault for Spain's bank crisis gains pace

Fri May 17, 2013 1:10pm EDT
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By Sarah White and Paul Day

MADRID (Reuters) - The arrest of a prominent former Spanish banker is raising hopes among campaigners that the hunt for those responsible for the problems inherited by Bankia (BKIA.MC: Quote) and other failed lenders will deliver results.

As Spaniards struggle with a deep recession, judges have shown a growing determination to go after top executives and public figures linked to bank failures that led to a 41 billion euros ($53 billion) European bailout.

Miguel Blesa, former head of Caja Madrid, was arrested on Thursday and held in jail overnight, the most dramatic step yet in a series of probes into what went wrong at many of the country's banks.

"We're going to see more of this," said University of Barcelona law professor Joan Josep Queralt. "It will spark even more lawsuits and encourage those that are already out there."

While corruption scandals involving politicians and even the royal family mount in Spain, dozens of bankers have been charged with alleged fraud, embezzlement and other crimes at banks that have disappeared or been rescued by the state.

None has yet been put on trial.

Caja Madrid and six other savings banks were folded together in 2010 to form Bankia (BKIA.MC: Quote) which had to be rescued with 24.5 billion euros in state funds last year - a bailout that led Spain to request European funds for its ailing banks.

Hundreds of thousands of small investors lost their money when Bankia was rescued in mid-2012 just a year after listing on the Madrid Stock Exchange, principally because it could not cope with rotten real estate assets on its books.   Continued...

The headquarters of Spanish nationalized lender Bankia is pictured in Madrid April 24, 2013. REUTERS/Juan Medina