Spain Bank Bailout Means Forcing Losses On Cooks, Pensioners
July 13, 2012 Leave a comment
Maribel Martinez, 51, was counting on income from the 82,000 euros ($99,810) of savings she invested in Bankia preferred shares two years ago after losing her job cooking meals for nuns in a Barcelona convent.
A 1,435-euro interest payment on the 7 percent securities failed to arrive in the family bank account on July 7, said her husband Paco Valiente. On June 1, the group suspended 52 million euros of payments to holders of 3 billion euros of preferred shares sold in 2009 byCaja Madrid, one of its founding savings banks, after the lender restated 2011 earnings to show a 3.3 billion-euro loss.
Missed payments may be the least of Martinez’s problems as the practice of selling preferred stock through branch networks, after debt markets dried up in 2009, comes back to haunt banks and their customers. Holders of preferred shares sold by rescued lenders such as Bankia risk losing part of their capital after European officials ruled they should absorb losses under the terms of Spain’s 100 billion-euro bank bailout.
“We invested in the preferred shares trusting in the good word of our branch manager, but our money has been effectively sequestered,” said Valiente, 51, who also lost his job last year. “What’s happening to our country now and people like us makes me scared about the economy and the future.”