BMN, which came from the merger of Caja Murcia, Sa Nostra, Caja Granada and Caixa Penedés, is close to an intervention according to a report carried out by inspectors from the Bank of Spain.
What has happened constitutes yet another example of the current Bank of Spain head's failure to take action. He hasn't made good decisions and in April approved a plan to clean up BMN, which stated that the bank needed to comply with provisions outlined in the first round of financial reforms that the Ministry of the Economy enacted earlier this year. The Bank of Spain alleges that the inspectors' reports were not completed quickly enough.
Even still, the purported irregularities covered in the report correspond to a situation that likely arose a long time ago and couldn't have been a mystery to the regulator. The misguided policy of merging healthy banks and banks going through tough times has hidden this reality: we are on thin ice.
As a result of poor management and the Bank of Spain's demands, some good managers, such as current BMN CEO Carlo Egea, have been forced to navigate through some rough seas. Even the IMF has criticized the Bank of Spain head's passivity in its report on the Spanish financial sector, which will be made public next Tuesday. It was given to elEconomista on May 25. The report details lax inspection and minimal reporting of issues and laments the lack of corrective measures taken by the Bank of Spain's management.
BMN is in a tight spot. It needs to dig deep, look closely and decide wisely in order to ensure its future.
