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Spain: Retiree 'stripped' of savings by Bankia losses01:08

Spain: Retiree 'stripped' of savings by Bankia losses

Spain, Madrid
May 9, 2013 at 13:45 GMT +00:00 · Published

Spain: Retiree 'stripped' of savings by Bankia losses

Protesters grouped outside of a branch of the Spanish bank Bankia in Madrid on Thursday. Police manned the entrance of the bank and stood beside riot vans nearby. Demonstrators expressed their discontent with the nationalised bank in the streets, by waving colourful banners and chanting anti-Bankia slogans.

The ongoing economic crisis in Spain affects large parts of the population. In the first quarter of 2013 the unemployment figure rose to a record high of above 27% with almost 3 out of 5 Spaniards under 25 without a job.

Many depositors in Bankia became preferred holders of Bankia shares, which the bank assured depositors were as safe as a savings account. However as part of Spain's financial bailout Brussels demanded that holders of Bankia stock now share in the banks losses.

Small investors bought up to €30 billion ($39 billion) in preference shares, which bank representatives assured were a safe investment. However, the preference shares were not protected by government insurance. Many poured their entire life savings into preference shares when they heard that they could receive up to a 7 per cent annualised return. Much of those shares are now worthless.

Spain has received over €40 billion ($53 billion) in aid from fellow European countries to prop up its ailing banking sector, keeping it from total collapse. Spanish courts have received over 1,200 cases brought against the banking industry, in which claimants accused the banks of selling risky products which were bought without proper knowledge of the chance of default.

Spain: Retiree 'stripped' of savings by Bankia losses01:08
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Spain: Retiree 'stripped' of savings by Bankia losses

Protesters grouped outside of a branch of the Spanish bank Bankia in Madrid on Thursday. Police manned the entrance of the bank and stood beside riot vans nearby. Demonstrators expressed their discontent with the nationalised bank in the streets, by waving colourful banners and chanting anti-Bankia slogans.

The ongoing economic crisis in Spain affects large parts of the population. In the first quarter of 2013 the unemployment figure rose to a record high of above 27% with almost 3 out of 5 Spaniards under 25 without a job.

Many depositors in Bankia became preferred holders of Bankia shares, which the bank assured depositors were as safe as a savings account. However as part of Spain's financial bailout Brussels demanded that holders of Bankia stock now share in the banks losses.

Small investors bought up to €30 billion ($39 billion) in preference shares, which bank representatives assured were a safe investment. However, the preference shares were not protected by government insurance. Many poured their entire life savings into preference shares when they heard that they could receive up to a 7 per cent annualised return. Much of those shares are now worthless.

Spain has received over €40 billion ($53 billion) in aid from fellow European countries to prop up its ailing banking sector, keeping it from total collapse. Spanish courts have received over 1,200 cases brought against the banking industry, in which claimants accused the banks of selling risky products which were bought without proper knowledge of the chance of default.

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