Former head of Spain's Caja Madrid sent back into custody

The former head of Spanish savings bank Caja Madrid has been ordered back into custody by a judge investigating allegations of mismanagement, a Madrid court said, as the hunt for those at fault for the country's banking crisis gains pace.

Miguel Blesa - who chaired Caja Madrid from 1996 to 2009 and left before the bank was merged with six others to form Bankia - was held in jail for a night in mid-May and released after posting bail of 2.5 million euros ($3.3 million).

He is being investigated over accusations he mishandled Caja Madrid's 2008 acquisition of a bank in Florida.

The judge ordered Blesa to be jailed and held without bail in light of new information linked to the bank's purchase of City National Bank (CNB) of Florida, the court said.

A lawyer for Blesa could not immediately be reached for comment.

Blesa's arrest last month marked one of the most dramatic moves yet in a series of court investigations into former executives at banks that had to be rescued by the state.

Bankia had to be bailed out by Europe to the tune of 24 billion euros last year.

Blesa, a friend of former Prime Minister Jose Maria Aznar, of the ruling People's Party (PP), was the first well-known Spanish banker to spend time behind bars in two decades.

Judge Elpidio Jose Silva, who is overseeing the case, wrote in a May ruling there was evidence that Blesa had possibly committed the crimes of improper management, misappropriation of funds and falsifying a public document.

Silva's ruling alleged that Caja Madrid had overpaid for CNB in 2008 and failed to adequately analyse the risks of the deal. It purchased 83 percent of the bank for $927 million that year.

Bankia recently sold CNB to Chile's BCI for $883 million.

($1 = 0.7650 euros)

(Reporting by Sarah White; Editing by Sonya Dowsett and Mike Collett-White)