Rodrigo Rato, chief of Spain's fourth-largest bank
Bankia, resigns just before the bank is nationalized to rescue it
from its financial quagmire. Media then report that Rato is entitled
to compensation of 1.2 million euros ($1.5 million).
The redundancy pay Rato was expected to get following his
resignation earlier this month would be among the more modest such
payments in the Spanish banking world.
Rato's successor Jose Ignacio Goirigolzarri, for instance, left
his previous job at the BBVA bank with a pension of more than 50
million euros.
The huge earnings of bank executives are increasingly in the
spotlight in Spain, where the deepest economic crisis in decades is
plunging growing numbers of people into poverty.
"We are not merchandise in the hands of bankers," became one of
the slogans of the Indignant Ones protest movement, which brought
tens of thousands of people to the streets as it marked its first
anniversary mid-May.
Spain's economy is expected to contract by nearly 2 per cent this
year, while unemployment has soared to a staggering 24 per cent.
There is "no talent" that deserves such enormous financial
compensation as bank executives are arranging for themselves, Jorge
Uxo, associate professor of economics at the University of
Castile-La-Mancha, told dpa.
The greed of financial executives for high salaries and bonuses
made them embark on risky large-scale operations, thus helping to
create the global crisis, Uxo said.
In Spain, the crisis was partly created by regional savings banks,
such as the seven making up the Bankia group, which were often
politically controlled.
They gave almost unlimited credit to real estate companies,
helping to launch a decade-long construction boom which allowed
politicians, bankers and entrepreneurs to get rich.
In the eastern region of Valencia, for instance, massive building
and sports projects were launched while corruption flourished. The
projects, some of which came to naught, left the region with huge
debt problems after Spain's property bubble burst during the global
crisis.
The Spanish state is now pumping tens of billions of euros into
faltering banks while international concern grows over the country's
solvency and the stability of the euro.
Yet despite the role of bankers and other executives in creating
the economic crisis, the salary gap between company chiefs and their
staff has only deepened.
Among the companies listed on the Madrid stock exchange's main
index, Ibex 35, 534 executives received in 2011 an average annual
income of 1.07 million euros. Their employees had an average annual
income of 43,353 euros, according to figures quoted by the daily El
Pais.
In 2007, the average top income stood at 873,666 euros, while the
average lower-level income was 37,122 euros.
Uxo attributes the growing difference to the erosion of
lower-level salaries under the pressure of the economic crisis. The
growing disparities are fuelling "social unease," the economist
observed.
High salaries are allegedly justified by the profit that top-level
executives bring to shareholders. But many of Spain's high-earning
bankers left their banks in trouble.
Bankia, for instance, needs to be rescued by the state, with a
capital injection eventually amounting to more than 15 billion euros,
financial sector sources said.
Another bank, Novacaixagalicia, needed state funds worth more than
2 billion euros. But three of its former executives walked away with
compensation totalling about 20 million euros, several media
reported.
Twenty-five Spanish bank executives and board members pocketed a
total of 130 million euros on leaving their jobs between 2010 and
2011, according to a figure quoted by the daily El Mundo.
Courts are investigating some cases.
Even the government felt bankers had gone too far, ordering in
February that executives of banks receiving loans from the bank
restructuring fund FROB could not make more than 600,000 euros
annually.
That is still a huge salary in Spain, where the economic crisis is
leaving growing numbers of people with no income at all. More than a
quarter of the country's households have trouble making it until the
end of the month, according to the National Statistics Institute.
