Spain’s banking crisis has moved into the courtroom.
On Wednesday, a Spanish national court judge ordered Rodrigo Rato, a political ally of Spain’s prime minister and former head of the International Monetary Fund , to appear in court to face criminal fraud accusations over his recent stewardship of the giant mortgage lender Bankia.
Bankia, which the government seizedin early May, is at the center of the financial storm that has led Spain to seek a European bailout of its banks. But several other Spanish banks are also embroiled in court cases, brought by politicians, shareholders and prosecutors, as well as the government’s own bank overhaul agency.
The spate of lawsuits could further complicate efforts to clean up and consolidate Spain’s banking sector, given that Madrid has yet to complete the terms of the 100 billion euro ($125.3 billion) bailout that euro currency union finance ministers agreed to last month.
“We are entering a new phase in this banking crisis, adding to the questions of solvency the need to establish accountability for past mistakes,” said José Luis de la Calle Sánchez, an independent lawyer who specializes in banking matters.
The Bankia case in particular is highly politicized. Bankia has longstanding ties to the governing Popular Party, and the case against it was brought by one of Spain’s opposition parties, Union, Progress and Democracy.
Among its accusations, the U.P.D. party wants to hold Mr. Rato and others responsible for accounting irregularities that led Bankia to restate its 2011 results after it was seized in May. Suddenly, a reported profit of 309 million euros became a loss of almost 3 billion euros, the largest in Spanish banking history.
No formal charges were brought against Mr. Rato and the others on Wednesday, nor was a date set for court appearances. Still, the accusations made by the U.P.D., if proved, could lead to prison sentences. For falsifying accounts, for instance, the recommended sentence is one to three years’ imprisonment. Among other banks entangled in legal cases are Novacaixagalicia, Banco de Valencia and CatalunyaCaixa — three institutions that the state has put up for sale after it seized them to save them from collapse. Like Bankia, those banks have suffered unsustainable losses from bad loans, many of them resulting from the bursting of Spain’s real estate bubble.
On Wednesday, public prosecutors in Barcelona said they would investigate the compensation packages of former executives of CatalunyaCaixa.
Last month, the national bank overhaul agency, known as the Frob, initiated legal action against former directors of Banco de Valencia over possible management irregularities.
Separately, Spain’s antifraud investigators filed a lawsuit on June 25 against five directors of Novacaixagalicia over the generous terms that they had set for their own retirement benefits. One of the five directors, Julio Fernández Gayoso, resigned three days later as co-chairman.
But Bankia, which is expected to receive at least 19 billion euros in European bailout money, is Exhibit A in Spain’s banking debacle.
Mr. Rato is the most prominent of the 33 former Bankia executivesand directors named in the criminal fraud case being overseen by Judge Fernando Andreu of the National Court.
One of the other directors subpoenaed on Wednesday is Ángel Acebes, who was justice minister and interior minister in the administration of Prime Minister José María Aznar. Mr. Rato was economic minister under that same prime minister, while Mariano Rajoy — the current prime minister — was deputy prime minister. All represented the Popular Party, which was voted from power in 2004 but returned last November with Mr. Rajoy as prime minister.
Mr. Rajoy has avoided blaming Mr. Rato for Bankia’s travails.
Mr. Rato was made chairman of Bankia in 2010, after it was created in a government-supervised restructuring that tried to salvage a number of weaker savings banks, or cajas, by consolidating them. From 2004 to 2007, he was managing director of the I.M.F., having won the job on his reputation for presiding over Spain’s economic boom during the Aznar government.
But the collapse of Bankia has tarnished his reputation. And the substantial restatement of its results has stunned shareholders, many of whom are clients of the bank who bought the stock when Bankia had its initial public offering last year.
Aemec, an association of Spanish shareholders, has so far collected more than 2,000 individual complaints by Bankia shareholdersin preparation for a separate lawsuit against the company’s former directors over whether the bank misinformed investors in its I.P.O. prospectus.
Javier Cremades, chairman of Cremades & Calvo-Sotelo, a Madrid law firm that is representing Aemec, said that civil action was “the best way to recover the money of shareholders.”
But he said that he welcomed the national court decision to proceed with a criminal case against Mr. Rato and fellow directors, which could help the civil claim.
Spain’s financial crisis, partly a result of the 2009 collapse of the real estate prices that had driven its economic boom in the early 2000s, has already led to extensive consolidation of the banking industry. Much of the downsizing has involved the cajas, which headed property lending during the boom years but whose number has dwindled to a dozen, down from 45 as recently as early 2010. During that time, almost 5,000 consumer branches have been closed, according to the Spanish association of cajas.
But winnowing the top management ranks of the cajas has not proved easy, as many directors maintain close ties to regional politicians and have resisted ceding any control over institutions that were long run like personal fiefs.
Mr. Fernández Gayoso, who was ousted as co-chairman of Novacaixagalicia last week, is 80 years old and had been a caja director for the last four decades.
In an interview, Francisco Pérez Martínez, a junior judge in Mallorca, predicted that shareholders would file more lawsuits against bank directors in coming months, accusing them of accounting and management irregularities related to favors they might have granted to other businessmen and politicians.
Mr. Pérez said that he was looking into Banco de Valencia — not in his capacity as a judge but as a native of Valencia and shareholder of the bank — to determine how that bank could have reported a profit in the first quarter of 2011, only to need rescuing by the Frob in November.
“It’s too early to say whether the accounts were falsified or not, but it’s hard to understand how the bank could still have been called profitable in that first quarter,” he said.
Mark Stephens, a partner at Finers Stephens Innocent, a London law firm, said that Spain’s banking disaster could also spur shareholder suits from outside the country. “A couple of Dutch investors could easily start a case against a Spanish bank,” Mr. Stephens said, “which then opens the door for anybody else to join the class, from Spain or elsewhere in the European Union.”
For now, most of the public anger has focused on some of the sophisticated financial products sold to ill-informed clients.
In the city of Santander, Pilar Palencia was among protesters who gathered last week outside a conference on the euro zone debt crisis attended by the chairman of Spain’s market regulator.
Last year Ms. Palencia lost her job working in a hotel. She said she had also lost 47,000 euros in savings that she initially held in a fixed-income deposit account but that her bank, La Caixa, had encouraged her to convert into now worthless preference shares.
In the protest crowd, she held a sign reading “A bailout? Send the bankers to prison first.”