Madrid's disastrous track record while managing Caja Madrid continues to cost taxpayers and shareholders money. Another 495 million euros in losses can be added to losses stemming from the sale of City National Bank of Florida to the Chilean bank BCI.
The 685-billion euro sale is good news even though high losses ensued from inaccurate pricing of the Florida bank (867 million) and the cleanup that followed (315 million).
This failure can be blamed on Miguel Blesa's weak knowledge of finance. He disregarded advice from external advisers, who reccommended that he abort the deal. The only worthwhile investment during Blesa's time at Caja Madrid was the acquisition of 12% of Iberia Airline. This deal resulted from the pressure that Madrid?s former leader Esperanza Aguirre put on the bank.
Blesa's mistakes have had a high impact on public accounts. 22.5 billion euros had to be injected into Caja Madrid, a move that taxpayers had to pay for. The court hearings on the Blesa case are starting to bring to light many of the mistakes that he committed while also elevating pressure on the judge who is in charge of the case.
Various parties are interested in the case because they want to keep it from harming other banks and people that could have benefited from Caja Madrid's risky business. Meanwhile, Bankia's problems have not ceased. Experts fear that shareholders could loose up to 30% of their investment in the firm. These losses will hurt the most for preferential shareholders. Caja Madrid viewed these clients as their best, and now they are seeing their savings disappear. Blesa needs to provide some sort of response for his egregious mismanagement and the dispapointing results it caused.
