Bank Directors decline their bonus

 

The board of Caja Madrid yesterday voted to forego this year's bonus for directors after receiving public funds in order to streamline its merger with six other regional savings banks.

The original bonus scheme was introduced 5 years ago, and 10 directors were due to receive 25 million euros in bonuses despite the Bank's fall earnings from almost 1 billion euros in 2006 to 256 million last year as the lender fell victim to the collapse of the property sector. The current board is declining the entitlements of the directors to these bonus payments.

Caja Madrid responsed to the banking crisis, and the findings of last year's stress tests by agreeing to merge with Bancaja and 5 other smaller cajas. In agreeing to this, the new entity received 4.465 billion euros in loans from the Orderly Bank Restructuring Fund (FROB), set up by the government in order to push consolidation in the savings bank sector, which has seen the number of lenders fall from 45 to 17.

Miguel Blesa, the Bank's chairman who introduced the bonus scheme, received a severance payment of 2.8 million euros when he left Caja Madrid last year. The bank is now chaired by former IMF managing director Rodrigo Rato, also previously held the position of Minister for Economy in the PP Cabinet of Prime Minister José María Aznar.

Caja Madrid and its partners intend to list the commercial bank they set up as part of their merger later this year.