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01 Jun 2012 11:34
A €14-million payoff to a former employee of a bailed out bank will cause controversy beyond the country's borders if Europe is asked to rescue Spain's banks.(AP)
As the government seeks to raise the €19-billion needed by Bankia, the news that Aurelio Izquierdo, it’s former finance minister, would walk away with such a large payoff raised questions about what Spain’s troubled banks have been doing with their money. Another former senior Bankia executive, Matias Amat, received €6.2-million for taking early retirement, at 58, in September.
News of the payoffs came amid growing criticism of the multimillion euro deals handed out to executives at Spain’s cajas, or savings banks, during the boom years when they inflated a housing bubble that burst four years ago.
The toxic property assets they left behind are at the root of growing worries that Spanish banks will need a European-funded bailout on top of the Bankia rescue.Spanish government sources, who last weekend said they would probably give Bankia government debt as collateral to raise €19-billion from the European Central Bank, backtracked on Tuesday, claiming that Spain could raise the money itself on the markets despite its high borrowing costs.Bankia’s parent company, BFA, on Monday reported a €3.3-billion loss for 2011, a hundred times larger than previously stated.
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