Banco de Madrid is the Spanish Lehman Brothers, analyst says

LONDON (ShareCast) - Banco de Madrid's liquidation reminded him of the beginning of the financial crisis in 2008, with Lehman Brothers' fall in US, according to DiverInvest's analyst David Levy. In a monthly investment letter, the analyst commented on some reasons behind Bank of Spain's decision on Banco de Madrid's future .

"I have the feeling that the (Spanish) government and Luis de Guindos (Spanish Minister of Economy) needed to have their own Spanish Lehman Brothers". Levy wrote, although he pointed out money laundering and the bank's operations related to the mafia as the main reasons that have been used by Bank of Spain to justify Banco de Madrid's liquidation.

With this example in mind, Levy recommends to "diversify not only in bank entities, but also at a geographical level." "The system is still the same," Levy concluded.