Saturday, October 27, 2012

I should think so

Bankia has run up losses of 7bn euros in the first three quarters of this year. The bank had already applied for a bailout of 23bn euros, over half of the money requested from the eurozone.

In 2011, the bank claimed to have made profits of 300m euros but the auditors refused to sign the accounts and eventually they admitted to a loss of 3bn euros. However, they had already agreed to pay bonuses to the executives including the chairman, Rodrigo Rato.

Now, the executives of Bankia have been ordered to pay back those bonuses in response to a petition from the European commission. Some have already been paid, others are waiting, some of the executive still work for the bank.

Banks in Spain lent money to real estate developers and land speculators and it is the toxic debt from those loans that is crippling them. Seven savings banks merged to form Bankia. Of the 45 banks that existed 5 years ago, there are only 15 today and that number could reduce to just 10. 

As I have said before on this blog, the economic crisis was largely brought about by greed. Everyone wanted to get on the bandwagon of the get rich quick boom including the bankers. Now they must pay.

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