A Spanish court has ordered former executives in Spanish lender Bankia to set aside €800 million to cover any potential liabilites against them in relation to the company´s controversial IPO in 2012.
Prosecutors are making the case that the board´s management at the time concealed vital information before the IPO. The shares at the time traded at €3.75, but ultimatley became worthless when the bank was forced to seek a government bailout of €22 billion in June 2012.
Those under investigation were members of the board prior to the public offering, and are accused of violating article 282 of the Spanish penal code, which references the falsification of accounts. Among the accused is Rodrigo Rato, the former Managing Director of the IMF.
Bankia was formed out of a merger of local Spanish lenders who ran into financial difficulties during the crisis. The mergers exposed a range of financial malpractise across the “cajas” which became indicative of the reckless lending practices that were commonplace in Spain during the boom.
Late last year, it emerged that board members at Caja Madrid-once one of the country´s largest lenders-had been furnished with company credit cards on which they racked up bills of €15.5 million over a ten year period.