Rato defends handling of bailed-out Bankia

The former chairman of bailed-out Spanish lender Bankia, Rodrigo Rato, on Thursday defended his handling of the group ahead of its near-collapse, insisting he acted with the authorities' backing. Rato, a former head of the International Monetary Fund who stepped down as Bankia's chairman in May just before it was bailed out, said he had the backing of the Bank of Spain throughout Bankia's ill-fated founding and stock listing. "The whole process was controlled by the regulator," he told a parliamentary hearing, adding it was also overseen by "prestigious experts" from accounting firms Deloitte and PricewaterhouseCooper. Earlier this month a Spanish court opened a fraud case against 33 former Bankia executives including Rato, over alleged corruption in the failure of the bank. The lawsuit was brought by one of Spain's smaller political parties, the UPyD, which accuses the officials of fraud, price-fixing and falsifying accounts. Bankia was formed in 2010 from the merger of seven troubled regional savings banks and listed on the Madrid stock market the following year. Rato, who stepped down as the head of Bankia on May 7, told the parliamentary hearing he had always acted "correctly" during his time at Bankia. "The process was transparent and rigorous," he added. Bankia is at the heart of a banking crisis that pushed Madrid to secure an aid package of up to 100 billion euros ($123 billion) from its eurozone partners for its banks last month. Spain's conservative government nationalised Bankia just days after Rato stepped down, taking a 45-percent stake by converting loans into shares, in an effort to stamp out fears of a general banking collapse. Shortly afterwards Bankia revised its 2011 results from a net profit of 309 million euros to a loss of nearly three billion euros and asked the state for a bailout of 23.5 billion euros, the largest bailout in Spanish history. During the bank's initial listing on the stock exchange, an advertising campaign encouraged Spaniards to buy shares in Bankia through their bank branches -- shares whose value have since plunged. On June 9, the eurozone agreed to extend a credit line of up to 100 billion euros to stabilise Spain's banks, amid fears for the country's financial health, gravely weakened by the collapse of a property boom in 2008.