Bankia: A clear example of poor management

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Bankia: A clear example of poor management

16/04/2014 | Jana Gómez Fernández (Alumna UC)

Bankia was founded in 2011 and is the result of the merger of seven savings banks (Caja Madrid, Bancaja, La Caja de Canarias, Caja Avila, Caixa Laietana, Caja Segovia and Caja Rioja). This type of merger is known as “cold fusion”. “Cold fusion”, or institutional system protection, is a type of merger in which the savings banks continue to maintain their brands, their legal stature, their autonomy and their economic independence but some things are made in common, such as how they can work on the national and international stages.

We can say that Bankia is a clear example of poor management by Spanish banks. When things were going well Spain and the economy was growing, banks gave loans to almost everyone without really knowing the personal situation of those who requested them. Later, with the start of the crisis, the economy stopped growing and the private sector (domestic economies and companies) stopped have so much buying power, which caused families and businesses to quickly reduce their expenditures.

For much of the private sector, this was a surprise and they couldn’t adapt to the new economic situation since they had to stop paying their mortgages and other expenses. As many banks had given loans and the private sector couldn’t pay them back, banks didn´t have enough to maintain their solvency. So, the merger of these savings banks was proposed, rather than having them disappear altogether.

I think the cause of this situation are both the private sector and the banks because the private sector knew about its own situation and they knew that if they could pay their loans back to the banks because they didn’t look the real situation of the private sector when they gave the loans in the first place.

Nota: Este artículo ha sido elaborado por Jana Gómez Fernández, alumna de la Universidad de Cantabria, como una de las actividades enmarcadas dentro del programa de capacitación lingüística, dando su permiso para la publicación del mismo en FxM Noticias/OIE24 News.

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