Bankia presented flawed accounts for IPO year: report

Thu Dec 4, 2014 12:27pm EST
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By Jesús Aguado and Sarah White

MADRID (Reuters) - Spain's Bankia (BKIA.MC: Quote) presented a series of error-strewn accounts for 2011, the year it listed shares, according to a report released on Thursday as part of a long-running court investigation into its flotation and state bailout.

Hundreds of thousands of small investors lost money after Bankia needed a massive rescue in 2012, less than a year after the lender's mid-2011 stock market listing. Some have alleged they were cheated when they bought the shares.

"(The accounts) do not comply with Bank of Spain norms ... due to the presence of accounting errors," the report said.

Spain's High Court opened a probe into the listing two years ago after a small political party brought a claim, though it is still not clear if or when there will be a trial.

Rodrigo Rato, a former International Monetary Fund chief who was chairman at the time of the flotation, has been questioned in court over the case along with some other former managers, and they have been accused of fraud.

The report takes issue with the treatment of deferred taxes and alleges that risks on some property loans were incorrectly classified. There was no suggestion in the report that these issues were affecting Bankia's current accounts.

Bankia, 61 percent state-owned, said it was analyzing the report and would respond at a later date.

Bankia was once the symbol of Spain's financial crisis, needing almost half of a 41 billion euro ($51 billion) European aid package for the banking sector, but it has since returned to profit.   Continued...

A man walks past a Bankia bank branch with graffitti on it in Madrid May 28, 2013. REUTERS/Susana Vera