The vampire squid is thrusting its tentacles back into the eurozone crisis. Goldman Sachs has been hired by the beleaguered Spanish government to examine the books of the part-nationalised lender, Bankia.
The Wall Street giant will also advise the centre-right government of prime minister Mariano Rajoy on how much public money needs to be pumped into struggling Bankia to keep it afloat, according to a report in Spain’s Expansion newspaper.
Shares in Bankia shot up today after taking a hammering yesterday on reports that depositors had withdrawn €1 billion since the part-nationalisation was announced last week.
Goldman Sachs has a controversial history in the eurozone debacle. The US investment bank helped the Greek government meet the qualification for eurozone entry in 2001 by disguising the true scale of the country’s deficit with complicated financial products called cross-currency swaps.
Some of Europe’s most senior politicians and policymakers also have links with Goldman. The president of the European Central Bank, Mario Draghi, is a former vice-chairman of Goldman Sachs in Europe. And the Italian prime minister, Mario Monti, has been an adviser to the Wall Street bank.
