MADRID – The Spanish government will impose restrictions on the sale of complex bank products to retail investors to avoid abuses and scandals like the one involving preferred securities which has tied up the savings of more than 1 million people, Economy Minister Luis de Guindos said.
Starting now, the banks will have to get the consent of investors in writing and, in some cases, customers will have to make a minimum investment of 100,000 euros (about $123,500, at the current exchange rate), to buy those products, De Guindos said, referring to the royal decree that will be approved on Friday.
Prime Minister Mariano Rajoy’s government is determined not to allow a repeat of the scandal whereby some of the banks peddled preferred shares, bonds and other securities to customers with the story that they were as secure as CDs and other deposit accounts.
Often, the securities were sold to the customers without their knowledge and/or consent.
A year ago, the banking system had 22.5 billion euros (about $27.8 billion) in these financial products, which never expire or reach maturity and the profit on which is linked to the entity making a profit.
It is calculated that more than 1 million customers had their savings tied up in the preferred investments, according to consumer associations, which have taken the case to court.
Several thousand of the affected people demonstrated Saturday in Sanjenjo, a city in the northwestern region of Galicia, where Rajoy is spending his summer vacation, in one of a number of protests that are being organized periodically to demand the return of their savings.
Most of the demonstrators are middle-aged and retired, and this time they protested against the Novagalicia Banco, one of the banks that sold preferred securities to many of its customers.
“These products, often, are for sophisticated investors. They’re not to be placed in the banking networks,” the minister said in an interview.
The banks will have to create a list of complex products so that the public may know that “there are some products that, by their nature, are not the most appropriate for the normal (person).”
The minister added that the Banco de España is currently negotiating with Brussels certain conditions to keep the financial damage suffered by preferred investors as low as possible.