Thursday, November 10, 2011


Caja de Ahorros del Mediterraneo (CAM), a 135-year-old Valencia-based savings bank, was one of the profligate ones. CAM sits in a moderately sized Spanish region -Valencia is home to around 5 million people- but it financed grandiose projects like the Terra Mitica theme park in the coastal resort city of Benidorm, which emerged from receivership in 2006, and opened offices in Shanghai, Miami and Geneva. When the government slashed the number of savings banks by more than half last year and forced them to take on private investors or face nationalisation, CAM was one of those that failed to generate interest because of its real estate losses. On taking the caja over in July, the government found much bigger losses than expected. It also found that CAM directors and their equivalents at fellow failed savings bank NovaCaixaGalicia had awarded themselves multimillion euro severance pay packages while racking those losses up. Union data shows the pay packages of CAM directors increased more than sixfold over the 2004-2010 period, while profits grew 3 percent over the same period. Five directors at CAM got payouts of 12.8 million euros in total, while three top staff at NovaCaixaGalicia got 23.6 million between them, press reports say. Both banks were bailed out with public money. "There has been an embezzlement of public funds destined to bail out the bankrupt cajas," said the speaker of the United Left party, Gaspar Llamazares. The reports shocked Spaniards suffering the highest unemployment amongst industrialised nations -- one in five is out of work -- and the threat of deep cuts in health and education. CAM director, Maria Dolores Amoros, was fired and put under investigation for falsifying accounts. Roberto Lopez, a former director at CAM, had to leave an Alicante tennis club in October after people booed and shouted insults at him, according to a local paper. "It is an absolute disgrace that the managers of the bankrupt cajas should receive such massive bonuses," says Jose Luis Corell, lawyer and bankruptcy expert, at a cafe outside Valencia's 17th century basilica. Bank of Spain Governor Miguel Angel Fernandez Ordonez called the behaviour of the CAM executives "scandalous" and said the bank was "the worst of the worst" at a press conference in September.