Overall, about 100 Spanish bankers have been named in continuing court cases that have mostly focused on loans said to be fraudulent, conflicts of interest and excessive compensation packages granted by collapsed cajas. But Blesa is the first among them to have spent any time in jail.
Blesa, a former official in Spain’s Economics Ministry, became chairman of Caja Madrid in 1996. That was shortly after Jose Maria Aznar, a former classmate of Blesa, was elected as prime minister. In April 2008, Caja Madrid announced that it would buy 83 percent of City National Bank for $927 million, following the lead of other Spanish commercial banks that had already expanded into the United States. Two years later, it bought the remainder for $190 million.
According to court filings, Caja Madrid absorbed losses related to City National at a time when it also faced rising domestic problems linked to Spain’s own housing crisis, creating “a perfect storm.’’ But Abess, however, who famously shared $60 million of the proceeds of the bank’s sale with current and former employees, said he does not believe City National’s loan losses were “a fraction’’ of the loss claimed in court documents.
Blesa was replaced as head of Caja Madrid in 2010 by Rodrigo Rato, a former managing director of the International Monetary Fund who was finance minister in the Aznar government.
Under Rato, Caja Madrid was at the center of the formation of Bankia, a seven-way merger of cajas that issued public stock in 2011. The combination was designed to consolidate the caja sector by allowing stronger entities to absorb the losses of weaker and smaller ones threatened with collapse.
Instead, Bankia sank under the collective weight of bad property loans and required 18 billion euros of the European rescue money to keep it afloat. The bank, which was nationalized a year ago, posted a loss for 2012 of 19.2 billion euros, a record for the Spanish banking industry. It has recently been trying to sell some assets, including City National.
Bankia is now the target of several lawsuits. Last year, Rato appeared in court after being named along with 32 other former Bankia executives and board members in a criminal inquiry. They are suspected of offering potentially misleading accounts at the time of Bankia’s 2011 listing, which involved tens of thousands of the bank’s retail clients buying into the stock offering. The former Bankia executives and board members deny wrongdoing and have not been charged so far.
The New York Times News Service and Miami Herald staff writer Ina Paiva Cordle contributed to this report.