Hundreds of thousands of defrauded small savers face loss of life savings in Spain
Approximately 710,000 Spanish bank customers and their families have been inappropriately sold preference shares in their banks, according to financial consumer association ADICAE (Association of Bank and Savings Bank Users). Most are ordinary savers who were persuaded to convert their life savings into this much riskier form of investment, which they were told was just as safe. This was a lie. Preference shares are high-risk financial products, potentially generating high returns if the bank in question makes a healthy profit. These are usually sold to professional speculators who know the risk involved. Unlike normal depositors, the government does not insure holders of preference shares against losses. The advantage to the banks is that it makes their capital balance look stronger, because customers have their savings locked up and at the same time they have no voting rights to which shareholders are usually entitled.