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MADRID (Reuters) - Rodrigo Rato, former head of the IMF and once a powerful economy minister, has suffered a steep fall from grace that mirrors Spain's own fate in the euro zone debt crisis.
Rodrigo, an urbane and internationally known official with huge prestige inside the ruling centre-right People's Party, is now under investigation for fraud and other possible crimes in connection with his role during the fall of Spanish bank Bankia (BKIA.MC).
Once seen as a possible prime minister and lauded by conservatives as the pragmatic architect of Spain's economic revival in the mid-1990s when he was economy minister, Rato is now the focus of deep public anger at banks, who are at the core of Spain's economic crisis.
Prime Minister Mariano Rajoy forced Rato, 63, from the helm of Bankia in May, just before the bank was nationalized and became the biggest-ever failed Spanish lender. Bailing it out could cost as much as 23.5 billion euros ($29 billion).
Spain's banks are blamed for the crisis in the euro zone's fourth biggest economy, after a rash of reckless lending during a 10-year property boom that collapsed in 2008.
Spain's High Court on Wednesday opened a judicial investigation into Bankia executives including Rato, who led the bank when it went public last year. Fraud, price-fixing and falsifying accounts are among the accusations.
The face of the once-respected minister is on stickers pasted on cash machines by protesters, and on posters waved at marches demanding accountability after seven lenders were rescued with state funds at a time when the economy is in recession and one in four workers is jobless.
Balding Rato, a yoga enthusiast, is revered within the People's Party for his role in turning a large fiscal deficit into a small surplus during his term as economy minister for the PP government between 1996 and 2004.
It was one of his former juniors in the ministry, current Economy Minister Luis de Guindos, who decided with Rajoy that Rato must leave Bankia.
Even though he was pushed off the stage, political analysts say Rato maintains huge clout in the party, and is still seen as a threat by those now in government because he retains enough support to engineer a comeback.
"Rato is a sacred cow in the PP. He represents a power group within the PP. He is so entrenched that no one would dare go against him, because to destroy Rato would be to destroy the whole myth of the 1996 economic miracle," said Jose Ignacio Torreblanca, head of the European Council on Foreign Relations in Madrid.
With an MBA from the University of California, Berkeley, and a member of a wealthy, entrepreneurial family in the north of Spain, Rato is an advocate of budgetary discipline.
He openly aspired to head the PP into the 2004 elections, but then-Prime Minister Jose Maria Aznar picked another longtime member of his cabinet, Rajoy, as his successor.
Rato, sharp-tongued and serious, but renowned for a dry sense of humor, swallowed his disappointment and swore allegiance to Rajoy, playing a leading role in the campaign.
After the conservatives' 2004 defeat, Rato, a fluent English speaker, was named managing director of the IMF, where he remained until 2007 when he left citing personal reasons.
Rato was named to head regional savings bank Caja Madrid in 2010, ending an 18-month battle between PP factions over control of the lender. After Caja Madrid was merged with six other savings banks to create Bankia, Rato went on to lead the new institution.
He was at the bank's helm when it completed a stock-market listing in July, 2011, as part of an effort by Spain to overhaul its financial system by forcing unlisted banks to recapitalize by raising private capital.
One of the reasons Rato is so unpopular now is because Bankia aggressively sold shares through its huge branch network around Spain. More than 400,000 small investors, many of them elderly, bought shares that later lost almost all their value.
The bank, formed from the merger of seven regional lenders, raised 3.1 billion euros at an initial price of 3.75 euro per share and Rato applauded the issue's success in the "middle of a real storm in the market."
The share price was 2.375 euros a share by the time he stepped down and fell to just under a euro a share by Wednesday.
Rato, who is married with three children, earned 2.4 million euros last year, according to bank records, and was reportedly deeply upset by the Bankia takeover. He has since rarely been seen in public.
Editing by Fiona Ortiz and Barry Moody