In this post, I am going to give some general information about Bankia, the polemic bank which is considered as the main responsible of the economical crisis in Spain. I say general because the crisis is a really deep and complicated topic, and, of course, there are too many different versions of how it was caused. However, in spite of the fact that there are different points of view, it is undeniable that Bankia is one of the main guilty ones, as it is the fourth largest bank entity of Spain.
Bankia was created in December 2010; it is the fusion between seven savings banks: Caja Madrid, Bancaja, Caja de Canarias, Caixa Laietana, Caja de La Rioja, Caja Ávila and Caja Segovia. Its president was Rodrigo Rato, who had formerly been the president of Caja Madrid. Even if it was private at first, now it has been largely nationalized due to the problems that the institution had in the latest years. As we all know, Bankia requested a bailout of 19 billion euros on the 25 of May of 2012, which has been the largest bailout requested by a spanish bank entity in the whole history.
As a start point, I am going to speak about one of the main (and best known) reasons of this crisis we are living, in which Bankia is largely involved: the speculation.
Generally speaking, the main problem of Bankia (and in general) was that in most of the savings banks there were politicians doing the job of the administrators, and, as it has been largely proved, the qualification most politicians have in the field of administration is quite limited (sometimes they don’t have qualification at all), and they started giving credits to local governments and to property companies (which seemed to be in their boom of production and sales) without taking care of the consequences. When the property market started bankrupting, most of the little/medium sized banks were hit by a flood of bad investments and credits which were impossible to charge, and Bankia found itself in the need of a rescue.
People were terrifyingly surprised when Bankia, which was considered as one of the most successful banks in Spain, fell. As I said before, the reason is moderately simple: while Rodrigo Rato was the president of Bankia, 31 798 millions of euros were irresponsibly invested in the construction sector. Now, we can see huge extensions of useless constructions which have cost millions of euros.
In conclusion, I would say that this bank is the result of an illogical decision, and that the government is largely involved. Bankia started from a bank fusion which nobody understood very well, and the government approved it without any doubt. Now, we are paying the consequences of their frivolous decision.
Aitor Seijas Conde
BIBLIOGRAPHY:
http://www.lavozdegalicia.es/noticia/economia/2012/05/11/bankia-historia-empezo-mal-acabo-peor/0003_201205G11P4991.htm
http://online.wsj.com/article/SB10001424052702303901504577459072726384432.html
http://www.elmundo.es/elmundo/2012/05/07/economia/1336411669.html
