Spanish savers must pay for bank rescue: minister
Spanish bank customers must take a hit on their past savings under a deal to bail out the country's troubled lenders, Finance Minister Luis de Guindos said Wednesday.
Guindos told parliament that a new law to regulate high-risk savings and investments will not protect savers who have already invested in the bank, including those who brought so-called "preference shares".
Troubled Spanish banks "will have to contribute to their restructuring as much as possible from their own resources", De Guindos said, citing the terms eurozone leaders have set for bailing them out.
"This implies that the costs associated with the restructuring will be born not only by the state but also by those who invested in the bank," he added, including holders of preference shares.
"We are going to modify the legislation to avoid this happening again... but unfortunately the changes will not apply retroactively."
Many Spanish bank customers bought preference shares offered by their banks during the restructuring of the sector from 2009, but many say they were misled over the risks and believed it was just a new way of saving.
Under a memorandum of understanding for a financial sector rescue loan of up to 100 billion euros ($122 billion) from the eurozone, Spain agreed banks and shareholders would take losses "to the full extent possible" before aid is granted.
That will shift some of the burden of a bank's losses onto holders of preference shares, which offer a regular return and priority in receiving dividends but confer higher risk and no voting rights.
The Socialist opposition in parliament said it was unfair to make these ordinary savers pay for the banks' troubles.
"There has been a real fraud," said Socialist Party member of parliament Antonio Hurtado. "We have an obligation to compensate those harmed and to demand that those behind it be made responsible," he added.
"We cannot accept this memorandum, which equates these defrauded savers with investors so that they share these entities' losses."
De Guindos replied by noting that the sale of preference shares had begun in 2009 under what what then a Socialist government.
One Spanish bank, Novagalicia, was ordered Monday to reimburse investors who bought risky financial products. A court in Cambados, northern Spain, ruled that the bank supplied "insufficient, false and inadequate" information.
Spain's banks are staggering under mountains of bad loans accumulated during a real estate boom that went bust in 2008, plunging the country into recession.
© 2012 AFP