“We are adults, not fools.” It is the text shown on one of the banners waved by the nearly 500 affected by preferred shares gathered last Thursday in front of the La Caixa towers in Barcelona. They denounced having been tricked into signing some products that, let us remember, have no expiration date and hardly any liquidity, with the aggravating circumstance of dealing with older people. At the demonstration, an average age of over 60 years corroborated this.
The protest seems, at least, founded. Who, with full knowledge, would give 190,000 euros in perpetuity to La Caixa at 83 years of age? Well, he has a first and last name Palau was one of those present at the protest. At 86 years old, he has seen how his lifelong savings bank, of which he has been a client since 1952 and of which he still lovingly keeps his first passbook, does not allow him to access his savings, obtained after decades of work.
Palau, with a broken voice, explained that the director of his office called him three years ago to offer him an exclusive product “for being a good client.” It was about preferred shares, but that sounded Chinese to him, so he simply trusted the advice of the person who represented his lifelong banking entity. “He told me that he could get the money in 48 hours and now it turns out that I have to wait 10 years. I will be 96, surely I will be dead, ”he lamented.
The general feeling was one of disappointment with an entity that, until now, had an intact image in Catalonia. “It is no longer a box, now it is just any bank,” Palau sentenced, with a phrase that illustrates the image deterioration that this scandal could cost La Caixa.
La Caixa is not the only entity that has offered an exchange of preference shares. The Basel III regulation, which excludes these products from the capital calculation of banks, has urged entities to get rid of them and exchange them for products that do count to be capitalized, such as bonds or shares.
Banco Santander and Banco Sabadell, for example, successfully managed to exchange most of their preferred shares at the end of 2011. They did so in exchange for shares respecting, to a greater or lesser extent, the initial face value, in such a way that, although there were critical voices With the exchange, no scandal was generated, much less there was talk of “corralito” (see exchange of preferential Sabadell and Santander)
The case of La Caixa is different for a specific reason: liquidity. Of those that have presented an exchange of preferred shares, Isidro Fainé’s entity is the one that offers less availability of money, since 30% is recovered in the form of shares, half in June 2012 and half in the same month of 2013, and the remaining 70% is converted into 10-year bonds. This means that, to recover the total capital without losing money in the secondary market, its holders have to wait until 2022 (see La Caixa preferred swap).
It is easy to think that this swap is “better than nothing”, since at least they have an expiration date, something that did not exist in the preferred ones. And it is true. But, if we believe the words of those affected and think that they were sold as a liquid product, with the money returned in two days, the offer becomes a practical joke: from 48 hours to 10 years the difference is more than remarkable.
Customers: no alternative
But perhaps what causes most impotence is the lack of alternatives for those affected. Basically: either you accept the exchange or you run out of money. In the case of La Caixa: either you recover it within 10 years or you lose everything. So you have to sign, albeit reluctantly. It is the lesser evil.
The problem is that signing the exchange proposed by La Caixa entails agreeing with the deal and could prevent a future complaint, something that ADICAE, the Association of Users of Banks, Savings Banks and Insurance, is studying (see ADICAE studies a complaint against preferred companies) .
Asking at the demonstration last Thursday, each and every one of those present was willing to denounce. However, they also all recognized that they were going to sign the agreement before the deadline, next Tuesday, January 31.
For this reason, ADICAE is offering a document designed to legally allow those affected to sign the agreement with La Caixa but at the same time reserve the right to participate in a future class action lawsuit against the entity. Although, it seems, this shortcut might not work because it would require the bank’s signature, something that under no circumstances seems to be accepted in the offices of the entity.
In short, it seems that the option of the complaint is for now a speculation. The reality of the moment is that thousands of people are going to sign a document with which they do not agree within a week and, although they try to reserve the right to future complaints, nobody assures.
James Wills is Based in Cape Town and loves playing football from the young age, He has covered All the news sections in TasteOfFootball and have been the best editor, He wrote his first NHL story in the 2013 and covered his first playoff series, As a Journalist in TasteOfFootball Ron has over 8 years of Experience.