Bankia, a symbol of the collapse of the Spanish economy, disappears from the stock market

Bankia, the bank that became the symbol of the financial crisis in Spain, will disappear this Friday absorbed by CaixaBank. The entity, created twelve years ago by the merger of seven savings banks, closes a short history marked by scandals, crimes, nationalisation, prison for its first president and the multimillion-dollar losses suffered by its shareholders. Its shares will be traded this Friday for the last time on the Madrid stock exchange.

One of the seven founding banks of the entity was Catalan, Caixa Laietana, based in Mataró, but more than half of the bank's assets were contributed by Caja Madrid, the then omnipresent (and omnipotent) entity in the Spanish capital. It was 2009, a year after the international financial system was shattered by the collapse of the US bank Lehman Brothers. The world economy was in free fall, while in Spain the construction El Dorado had collapsed, taking with it the entire system of savings banks. The Valencian Bancaja, badly affected by the bursting of the real estate bubble, initially acted as a counterweight to Caja Madrid: the headquarters of the new group were located in Valencia from the very first day, although the operations were located in Madrid.

From the creation of the bank it included figure that would encapsulate its downfall. In 2009 Rodrigo Rato was still the former vice-president who, under the Aznar governments, had steered Spain's economic course during the years of almost unbridled growth. The fact that in 2007 he resigned by surprise - he claimed "personal reasons" - from the leadership of the International Monetary Fund was no problem for him to be elected as the new president of the institution. Years later it would become known that the resignation occurred only two days after the IMF auditors asked him by email what relationship he had with several companies in tax havens that, later, the courts would consider part of a system that he had allegedly used himself to launder payments of €82m from former public companies privatised when he was a minister.

Rato was appointed head of BFA, the Banco Financiero de Ahorros, the name of the company that brought together the seven savings banks. The new bank also received a state loan of 4.4 billion at an interest rate of 7.5%. The pressure to bring order to the banking system coming from Europe was great and the country's main institutions lined up to make the merger possible. "It didn't leave us much choice," Rato said years later before the judge about the role of the Bank of Spain. The government, then presided over by José Luis Rodríguez Zapatero, backed the operation, which was necessary because, otherwise, the seven savings banks did not meet the solvency criteria set by international financial regulation.

Bankia and the IPO

From the outset, however, the bank had many capitalisation problems and a solution had to be found. The creation of Bankia was authorised, a subsidiary that would group together the banking assets (branches, deposits, customer portfolio), while the toxic assets - mainly real estate - would be kept by the parent company BFA. Once created, Bankia would go public in the midst of media euphoria and receive a significant injection of money. The images of Rato on the Madrid trading floor ringing the bell are already part of the iconography of the Spanish economic disaster.

In fact, the government and the Bank of Spain put enormous pressure on large institutional investors to put money into Bankia's public offering, while the bank's clients tried to convince them to use their savings to buy shares in the company. "Become a banker for €1,000," said the advertising campaign. The share debuted at about €180 euros. A year later it was worth €38. Today it is less than €2.

Less than a year after going public, the management confessed that all the accounting books had to be redone and that Bankia's financial situation was much worse than described before the stock market flotation. The bank was bankrupt and the government had no other option: nationalisation of 100% of BFA and a new injection of public funds, in this case of just undet €18bn. The state took control of 45% of Bankia's ownership. Rato resigned and proposed José Ignacio Gorigolzarri to replace him, who still holds the presidency and, from Monday, will chair CaixaBank.

The changeover took place between 7 and 9 May 2012, and just a month later, on 9 June, the Spanish government, already in the hands of Mariano Rajoy, requested a bailout from the EU worth 100 billion euros, of which it would end up using some 41 billion to be able to meet the bank bailouts. The announcement was made by Minister Luis de Guindos (now vice-president of the ECB) because Rajoy was in Poland for a match of the Spanish national football team. Despite denying that it was a bailout, the Spanish government's accounts were intervened for years by the European Commission, the ECB and the IMF, which imposed that debt payments had priority over any other expenditure. Of the €22bn public funds injected into Bankia since its inception, the state has only recovered about €3.3bn, according to the bank itself.

Scandals erupt

Once Bankia was rescued and with the new management at the helm, the scandals of the past surfaced. The stock market flotation ended in a huge case in court with 34 defendants, including Rato, who years later would end up acquitted of all charges. They were saved by the fact that all possible authorities blessed the operation. Those charged in the case of the so-called 'black cards' were not so lucky This was a scheme with which the directors of Caja Madrid and Bankia financed opaque expenses hidden from the treasury. Rato was sentenced to four and a half years in prison. Since October he has been released on parole.

In just a few years, Bankia went from being the solution to Spain's banking chaos to being its main problem. Twelve years later, it will disappear swallowed by CaixaBank, in a takeover disguised as a merger; a week later, Rato found out that the prosecution wants him serntences to 83 years in prison in the trial on the possible money laundering that made him leave the IMF and join Bankia.