“Panic” between clients sank Banco Madrid – The Economist

A Madrid court decreed the bankruptcy of Banco Madrid (subsidiary of intervened Private Banking Andorra, BPA), considering that the bank was at risk of technical insolvency, having the Bank of Spain control.

A Madrid court decreed the bankruptcy of Banco Madrid (subsidiary of intervened Private Banking Andorra, BPA), considering that the entity financial was at risk of technical insolvency, having the Bank of Spain Control

In the judgment, which was made public, the judge agreed to start the process of liquidation of the entity.; the Deposit Guarantee Fund (FGD) has been commissioned to propose and implement the Legal and Economic Bankruptcy Administrators office. The statement explains that according to the documentation provided by the banking supervisor, “the panic and distrust of the customers of the bank caused a leak of accumulated deposits between 10 and March 13 of 124 billion euros,” which, together with the outstanding warrants (53 million euros), the entity would have placed “in a situation of negative cash flow of more than 100 million euros”, which would have meant an imminent insolvency.

The judge reminded that this strong distrust was “caused in the first place” by the revelations on US Treasury laundering practices alleged in his Andorran matrix, which followed the decision of the Bank of Spain to intervene it (the March 10, 2015 ); the mass resignation of the board and the notice of initiation of proceedings against the company by the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences (Sepblac).

The beginning of the process bankruptcy involves the removal of interim managers appointed by the Bank of Spain. The opening of the settlement “will mean the acceleration of deferred bankruptcy credits and conversion in money of other benefits.”