Spain opens fraud case on ex-Bankia chief Rato Wed Jul 4, 2012 7:17pm EDT MADRID (Reuters) - A Spanish court opened a fraud case on Wednesday against former executives of state-rescued lender Bankia (BKIA.MC), including one-time IMF chief Rodrigo Rato, as public rage engulfs a bank which is in line for the biggest share of an EU bailout. Fury is particularly directed at Bankia as hundreds of thousands of small savers were persuaded to buy shares in the lender when it was floated on the stock market in 2011, only to see their investments all but wiped out in less than a year. Protesters have staged street demonstrations in their thousands, banging pots and pans and blowing whistles outside Bankia branches. "There are many citizens who feel they were hoodwinked," said Joaquim Bosch, spokesman for judges group 'Judges for Democracy'. It's too early to say whether there were crimes committed or criminal responsibilities, but it calls for a thorough investigation. The case, brought by minority political party UPyD led by charismatic Basque politician Rosa Diez, is one of many complaints brought against Bankia, which requested 19 billion euros ($24 billion) in state aid in May. Two sources who know the judge assigned to the Bankia case, Fernando Andreu, say he is likely to handle the probe aggressively. The judge will probably group together other cases with this one, a source with knowledge of the matter said. In the case brought by the UPyD party, the High Court is demanding that Rato and other executives appear in person. Bankia Chief Executive Francisco Verdu, the only director left at the bank since Rato stepped down in May, announced his resignation late Wednesday after learning about the probe. The court also wants former Bank of Spain governor Miguel Angel Fernandez Ordonez to appear as a witness, alongside the partner in auditor Deloitte who was in charge of signing off on Bankia's results, and the chairman of the Spanish stock market regulator. "It's a good sign," said a spokesman for a group of shareholders looking to launch a similar case. We still have to be a little cautious because there aren't any formal charges yet. The syndicate of banks selling shares in Bankia's initial public offering was led by Bank of America/Merrill Lynch (BAC.N), Deutsche Bank (DBKGn.DE), JPMorgan (JPM.N) and UBS (UBSN.VX). Other banks had smaller roles in the deal. One source at a bank involved in the IPO said it had to hand over files on the deal. A banker at one of the global coordinators of the IPO said the banks behind the listing believed they were safe from legal challenges because risks had been explained to investors in a prospectus. "It's like attacking the people who sold the tickets for the Titanic," he said, asking not to be identified. Rato, who was in a former government of the ruling centre-right People's Party which is now led by Rajoy, was IMF managing director in 2004-2007. A spokesman for the Spanish government said: "Regarding Bankia all we can say is that one must respect an assumption of innocence and judicial independence." Bankia holds more than 10 percent of Spanish deposits and is the biggest bank likely to receive a capital injection when European bailout funds materialize later this year. It is unclear in what form the lender will continue trading once it receives bailout funds, but there is no doubt its image has been severely damaged by the rescue. "The name is finished, they will have to find a new one," said a high-ranking source at the bank. Additional reporting by Clare Kane, Tracy Rucinski, Nigel Davies and Fiona Ortiz in Madrid and Victoria Howley and Sophie Sassard in London; Writing by Sonya Dowsett; Editing by Julien Toyer, Peter Graff and Richard Pullin