The Bank of Spain is losing patience with savings banks that paid exorbitant severance and pre-retirement packages to retiring directors during the past few years, especially the banks that relied on state-funded aid. The CAM and the nationalized NovaCaixaGalicia have embroiled Bank of Spain governor Miguel Ángel Fernández Ordóñez in the scandal.
Ordóñez wants full control of compensation policies and is preparing an inquiry to put an end to exorbitant pay packages, even those awarded when the economic situation was more favorable. The Bank of Spain is making a public inquiry into the lenders' private resources, and it will include a section about salaries.
According to the draft of this inquiry report, the lenders will have to reduce variable compensation "in a meaningful and significant way" when the lender obtains "mediocre" or "negative" financial results, just as much for current and previously earned profits. The draft explains that this diminution will be applied through limitation or recuperation clauses on salaries already paid.
So far nothing has been written about exorbitant severance or pre-retirement payments, but it is still possible that the supervisor could add a section about regulation of this subject as the draft develops. Citizens, labor unions and social reform groups are indignant about egregiously high executive pay within savings banks that have received state aid.
