The
big economic news has been the massive 100 billion euros bailout of Spain’s
banks with perhaps multi billions on the way. However the back story has been
the numerous protests by Spaniards against measures to support banks which are
largely in trouble through their own greed, corruption and mismanagement.
It is
no surprise that Bankia is being investigated by the Guardia Civil for fraud.
This is the bank whose 2011 results showed a profit of 40.9 million euros but
turned out to be a loss of 3.3 billion euros. Read those figures again very
carefully and you see the full extent of this fiscal fiasco.
The
head of Bankia is José Ignacio Goirigoizarri. He asked the Spanish government
for a 19 billion euros bailout. He also explained that the bank would not be
repaying this money. It was not a loan or a handout but capitalisation so
didn’t need to be returned. Remember that next time you go to the bank for a
loan. Tell them you won’t be paying it back as it’s not a loan but you are
recapitalising. Good luck with that one!
The
other Spanish banks at the time were outraged by the bailout being handed to
Bankia which accounts for around 50 per cent of all the bank debt in Spain.
María Dolores Dancausa, a senior official at Bankinter, called the help given
to Bankia as excessive and demanded an explanation as she and other bankers
believed it gave the bankrupt bank an unfair advantage over them.
Now
Spain is set to get a 100 million loan not bailout from the Euro zone that
money has to be paid back. No doubt María Dolores is happier as all banks will
be helped but I doubt whether Germany is going to buy Goirigoizarri’s argument
he needn’t repay it as its just “capital”.
On
the streets of Spain there is a major backlash against the rescuing of Bankia
in what has been and still is an abusive banking system. Let me first take you
to the Andalucía town of Ronda. Recently 71-year-old Antonio Gil Jiménez was
detained in the centre of Ronda by police after entering a branch of the Caja
Madrid and causing a disturbance as he demanded the return of his money. He
accused the savings bank, which is now part of the embattled Bankia group, of
having cheated him out of his savings.
Days
after his protest he decided to take his complaint to the Ombudsman who is
responsible for Bankia clients. He has asked for the return of the 18,000 euros
he invested with the Caja Madrid three years ago in May 2009 in a deal that
lasted “in perpetuity”. Not five years, not 10 years but “in perpetuity.”
Antonio
Gil insists that at the time he believed he was investing his life savings in a
secure account and not what has turned out to be a “producto basura” – a
rubbish product. He had confidence in the financial entity with which he has
banked for years but his trust was abused by a bank that could take a
pensioners savings “in perpetuity”.
He
says that since 2011 he has requested the cancellation of his investment in
this product only to be told each time Caja Madrid would contact him. Finally
in April he was informed his investment of 18,000 euros was worth 14.306.40
euros and a month later it had fallen further to 13,500 euros. This led to his
angry protest in the bank in May.
Antonio
Gil has asked the ombudsman for the return of his money in its entirety because
he had not been given the correct information on an investment product which he
has called “abusive”.
He is
not alone. Ronda has a population of around 35,000 yet it is estimated that
some 200 residents have been cheated by “productos basuras” with a number of
financial institutions.
Now
let us move on to Arcos de la Frontera just an hour’s drive from Ronda.
Recently members of the Andaluz Workers Union and Izquierda
Unida (United Left communist led-party) in Espera took over the Arcos branch of
Caja Madrid in protest at the government’s rescue of Bankia. The protestors led
by the communist mayor of Espera, Pedro Romero occupied the bank from 10.30
forcing the branch to close for business.
The mayor says the situation which is suffered by
families in the Sierra de Cádiz is unsustainable, but the government prefers to
concentrate its efforts on rescuing Bankia, even though the banks are to blame
for the economic crisis. He says the government also makes it impossible for
councils to help local residents, by restricting their money.
Also in Cádiz province is Olvera, which is 30 minutes
away from Ronda. On the same day as the Arcos protest the communist led council
decided to close its accounts with two well-known savings banks because it
believes they are not treating its clients properly. The local authority also invited
other town halls to adopt similar measures against the abusive banks in their
communities.
As
you read this courts throughout Spain are admitting cases brought against banks
that have entered in to abusive agreements with their clients in which they
have seen their investment wiped out or greatly reduced. In the courts and on the streets the banks’ troubles are only just
starting as a massive backlash takes place which will overshadow any EU bailout
or government intervention. In many areas it is being led by the far left but
in its anger Spain knows no political boundaries. Over 26 per cent of its
people are unemployed whilst around half of its youth are jobless with no hope
for the future. Yet the fat cat bankers are bailed out whilst families
experience economic meltdown; have their homes repossessed and their benefits
cut. No jobs for half a young generation but financial support, high salaries
and bonuses for abusive bankers. Welcome to the Spain of the centre right
Partido Popular and its premier Mariano Rajoy: truly the heirs of Franco.
(The above article appeared in the London Progressive
Journal on Friday June 22 2012. Versions of this article have also appeared in
Panorama and other publications).
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