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Former Bankia chairman Rato defends actions before congressional panel

Ex-chairman says bank offered share at greatly discounted prices for investors last year

Testimony before congressional panel is first time the former IMF director publicly speaks out

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Former Bankia chairman Rodrigo Rato attends a congressional panel hearing Thursday where he defended his management at the troubled lender. Reuters

Former Bankia chairman Rodrigo Rato on Thursday denied any wrongdoing on his or anyone else’s part in preparing for the lender’s stock market listing last year, saying that the troubled bank’s share price was dropping at the same speed as the rest of the stocks in Spain’s financial sector before his resignation in May.

Under fire for the way he managed Bankia since its merger in 2010, and the manner in which the bank encouraged around 300,000 investors to pump their savings into the troubled lender, Rato told a congressional panel that the prospectus mentioned all the market risks that were present at the time.

Rato, a former IMF general director and Spanish economy minister, said that bank officials had, in fact, decided to issue stock at discounted prices of up to 60 percent of actual worth for customers after considering imminent market devaluations.

“The discounts came from us, we were the sellers,” he said, arguing that no bank that was trying to swindle customers would take such action.

Thursday marked the first time that Rato had spoken in public about the Bankia fiasco since the Bank of Spain took over the trouble lender in May, and forced his resignation just days after.

He and 33 other directors of Bankia and its parent, Banco Financiero y de Ahorros (BFA), are under a High Court investigation based on two complaints that they may have deceived customers.

Appearing before the panel at press time, former Economy Minister Elena Salgado, who served in the previous Socialist administration, defended the decisions taken in 2009 to try to defuse the banking crisis.