Bankia preferred shares: arbitration or court for recovery

Bankia preferred shares: 187,000 affected and €6 billion at stake

May 2013. A retired saver discovers that the nearly €100,000 he believed was in a safe product at his usual branch was not a deposit. The question repeated around him—where is there a platform for victims, what can be done—is shared by thousands of people with the same profile: ordinary citizens, with little financial training, who trusted their branch employee's word. The mandatory exchange into Bankia shares, scheduled for May 28, turns anxiety into urgency.

What was sold to those who thought they were signing a fixed-term deposit

The flagship products were preferred shares and subordinated debt. They were presented as something similar to a deposit, with no visible risk and the implicit promise that there would always be a market to sell them. The entity had been issuing this type of debt for years and the displayed balance sheet seemed solid; it later proved otherwise. In many cases, the long-standing relationship with the branch employee, who had previously managed deposits and interest-bearing accounts, weighed heavily. The information provided to the client is the core of the entire conflict.

The accusations in these cases involve selling with incomplete information to profiles unable to bear the risk. An extreme alleged case is cited: a person signing with a fingerprint, suffering from Alzheimer's, on a minimum pension, with €9,000 invested perpetually. It is not the rule, but it explains why the word fraud appears in almost every conversation.

The figures: €5 billion, 187,000 affected and an 18% haircut

The numbers involved are on another scale. The banking users association ADICAE, led by Manuel Pardos, estimates the Bankia case amount at around €6 billion. Sources close to the entity speak of €5 billion and 187,000 affected. And the problem does not end there: the same toxic products were distributed in Novacaixagalicia, Catalunya Banc and Caja Castilla La Mancha.

Regarding what can be recovered, the scenario drawn is one of a haircut. For subordinated debt with maturity, an approximate loss of 18% is pointed out, and it is assumed that preferred shareholders will have to accept a larger cut. That is, even winning, one does not return to the starting point.

Arbitration or court? The dilemma delaying decisions

Arbitration has two obvious advantages: it costs nothing and is faster. The problem is that until the end of the process, the victim does not know how much they will receive. Favorable rulings concentrate on amounts below €10,000, and they are few: fewer than a hundred. Added to this is suspicion about the independence of the auditing firm participating in the procedure, openly questioned by those affected.

The judicial route, however, is delivering favorable rulings with increasing frequency, but faces two walls: systematic appeals by the entity and doubt about whether there will be money to pay. Some argue that for small amounts, arbitration compensates because little is lost; for larger sums, the consensus is that one must go to court regardless. The fine calculation—deadlines, costs, and recoverable percentage according to the bracket—is exactly what no one manages to finalize.

Where to turn: associations, law firms and collective lawsuits

The list of doors to knock on is long: ADICAE, OCU, AECCI or AFI handle the matter, and the first holds informative assemblies in Madrid on Mondays and Tuesdays. Its civil collective lawsuit allows joining for a modest fee, around €150. A private lawyer for a single client, however, ranges between €2,000 and €3,000. Specialized law firms apply another model: a fee for taking the case to trial and a percentage only if won. Among the circulating names are Arriaga, Rosales, Durán and Chamorro, plus some Valencia-based firms boasting a perfect success record.

Neighborhood solidarity also appears in these conversations. Someone jokingly asked if the victim had a shotgun. The answer: several, for hunting, and no intention of using them. Dark humor does not lower the figure.

Exchange into shares and Blesa's brochure

Bankia sent a worrying communication: either voluntarily exchange into shares or face a forced conversion. The operation arrived with the share price at a level many considered unrealistic. Meanwhile, the former president of the entity, Miguel Blesa, stated that anyone with "minimal curiosity" about these products "should have read the brochure." In branches, however, ignorance of the product was claimed. The entity even recommended clients with subordinated debt to sell and withdraw their claims.

For amounts over €10,000, the decision imposes itself: annul the contract via civil route and then file a incivil complaint for fraud. Most lawsuits are being won, but collecting is another matter, and several victims already compare it to a corralito (bank run freeze). The exact point where this gets stuck is solvency: with 187,000 affected and an entity sustained from outside, recovering money depends on a payer no one clearly identifies.