A spanish court has acquitted a former head of the imf and 33 other defendants of false accounting and defrauding investors over the 2011 initial public offering of bankia, a lender that a year later required the biggest bailout in the countrys history.

The list of defendants was headed by rodrigo rato, ex-imf managing director and a former deputy prime minister and economy minister, who had faced a possible eight-year jail sentence, as well as other former members of the lenders board. the defendants also included bankia itself and deloitte, the lenders auditor.

Mr rato, who was appointed bankia chairman in 2010 and presided over the 2011 flotation, has always denied wrongdoing. the sentence can be appealed to the supreme court.

In its 442-page ruling, issued on tuesday, the national high court said that the state prosecutors failed to specify concrete acts by the defendants that broke the law and added that under the spanish penal code legal entities such as bankia and deloitte could be found guilty of only a limited number of offences. these included organ trafficking, crimes related to nuclear energy and terrorism but not false accounting.

Bankia, now 62 per cent owned by the state, is in the process of being acquired by caixabank, spains largest retail lender, in a transaction whose terms were finalised this month.

It is clear that the process that culminated with bankias listing was intensively and successfully supervised by the bank of spain, the national securities commission, the bank recapitalisation fund and the european banking authority, and had the definitive approval of all the institutions, the court ruling said.

Bankias ipo reduced its capital requirements, under rules at the time that were less stringent for listed banks, but its toxic real estate portfolio led to its 2012 collapse, which became a byword for the financial crisis in spain.

The bank ultimately absorbed more than 20bn in rescue funds and in 2012 posted an annual loss of 19.2bn the biggest in spanish history. its plight deepened the countrys financial crisis and forced the spanish government to seek a bailout of its own from the eu.

The not guilty verdict today holds no one responsible for this financial crisis, as if it was a meteorological event, said citizens against corruption, a campaigning group representing retail investors who lost their savings in bankia shares. we need laws to protect savers, to reform the regulatory bodies and end impunity for systemic banks that can lead the country to bankruptcy. we cannot have banks with boards that are a retirement home for politicians rather than competent professionals, it added.

The ruling emphasised that spanish authorities, keen to consolidate the sector in the wake of the financial crisis, urged the creation of bankia in january 2011 through the merger of seven regional savings banks or cajas. in many cases these were close to regional politicians, with representatives on the bankia board from across the spanish political establishment. the bank was listed six months later, with stakes taken up by leading spanish financial institutions and blue-chips, as well as retail investors.

The court ruling held that bankias prospectus included an exhaustive and clear description of risks containing a warning that anyone could understand and that its internal accounts did not represent false accounting in respect of the banks viability, since they were neither audited nor approved by the board.

It added that bank of spain never issued an official document reflecting internal emails that expressed concern at the very politicised and unprofessional bankia board and at the questionable honour of the management which had previously sought state aid and was discredited in the market.

Both bankia and the bank of spain declined to comment on the ruling.

In 2017, mr rato was separately sentenced to four and a half years in prison for misappropriation of funds, along with guilty verdicts for 64 others including miguel blesa, who chaired caja madrid, the savings bank out of which bankia later grew, and who committed suicide after receiving his jail term.

Under a black card scheme caja madrid and bankia board members used credit cards without control for cash withdrawals, groceries, travel and jewels and clothes. the spending spree totalled about 12m between 2003 and 2012, the year after bankias flotation.