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PREFERRED SHARES SCANDAL

Open season on bank employees

Local Novagalicia branches are bearing the brunt of preferred share victims' ire

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Novagalicia preferred share buyers protest outside a council meeting in  Nigrán, Pontevedra province.
Novagalicia preferred share buyers protest outside a council meeting in Nigrán, Pontevedra province.lalo r. villar

In barely a year, the life of many of the 4,500 people who still work for nationalized lender Novagalicia Banco, the product of the merger of the two main savings banks in the northwest region of Galicia, has changed radically. Before they were respected citizens, but now they live in the face of "persecution and intimidation," in the words of one bank employee. The anger, and on occasions the violence, of clients who made huge losses on complex hybrid debt instruments, such as preferred shares — mis-sold to them in many cases — is too painful for most of them to bear.

Many employees, most of them branch managers, have had to change their routines, and abandon day-to-day pleasures such as a stroll through the village where they live out of fear of assault from furious customers.

The first case of violence against bank employees recorded in Galicia, one of the areas most affected by those whose savings have been disastrously locked into preferred shares and other complex high-risk instruments, occurred before a former bank employee was stabbed by a client earlier this month in Valencia. It happened on April 19 in A Estrada in the province of Pontevedra. That day, Manuel Paradela, the former deputy manager of the main Novagalicia branch office in the village and a councilor in the local government, was walking down a narrow street when he crossed paths with a former client. The customer grabbed him by the neck, lifted him off the ground and pinned him against a wall while unleashing a tirade of threats.

Paradela lodged a complaint but later withdrew it when his aggressor apologized. But he also stood down as a councilor to avoid any further attention being drawn to him. His town hall colleagues condemned the attack, but as one of them said: "It won't be the last."

We are not swindlers. We are tools used by others who make themselves rich"

"To understand the situation well there is one thing you have to bear in mind. In Novagalicia Banco there are 700 employees with preferred shares or subordinated debt who have 70 million euros of their savings trapped," says Julián Valiente, an official responsible for the banking sector in the Galicia branch of the CCOO labor union.

"We are not swindlers. We are the tools used by certain gentlemen to make themselves rich and who walked away with multi-million-euro golden parachutes," one employee says. A number of investigations have been opened into bank directors, including those from Novagalicia, who awarded themselves huge payoffs and pension plans at badly managed banks that subsequently had to be bailed out using taxpayers' money.

"The swindler is the one who gives the order to sell the product while he cooks the bank's books," another employee says. "The biggest proof that we weren't trying to pull the wool over anyone's eyes is that many of us face the double whammy of being preferred shareholders and victims of the desperation of those who have had their savings trapped," he adds.

The manager of a small branch in one of the districts most affected by the preferred share scandal, who asks to be referred to only as Jorge, can no longer take his coffee break where he used to. "I live half in hiding. I avoid crowded areas and rush hours. Basically, I keep clear of any situation where I might meet my customers. I can't have my coffee where I have always had it out of fear of what might happen and does happen. I have gone from being a well-regarded person in the village to feeling myself to be a damned criminal."

One manager was told by the Civil Guard to stop going for runs in the hills

Novagalicia's management took the decision to close the Moaña branch of the bank in the O Morrazo area because of the continual harassment of customers caught up in the preferred share drama. Other branch offices in rural areas have had to pull down the shutters because of spontaneous gathering of victims in front of their doors. Employees in the bank's main branch in A Coruña were recently trapped inside for two hours by preferred shareholders who had blocked the exit. Similar incidents have taken place in areas such as Vigo, Carballo, O Rosal and Salvaterra. Labor union officials do not have precise figures, but they say there has been a "massive" increase in bank employees on sick leave because of depression. "There is a joke doing the rounds that the company doctor is handing out tranquillizers as if they were candy," CCOO's Valiente says.

Manuel Paradela doesn't want to be reminded of the assault he suffered or the anguish he himself feels when confronted by his former customers. "With some of them I can stop to explain that I was a tool of the bank, that the bank used me. But others do not even ask; they just want to intimidate me."

Another branch manager, who on medical advice used to run through the streets of the village where he lives, now avoids crowded places and goes to the hills to exercise. The Civil Guard, however, warned him that could also be dangerous.

Rather than the violence suffered by Paradela in A Estrada, most bank employees are worried about less direct forms of aggression. "An employee in the O Morrazo area, for example, had to change her daughter's kindergarten because of the aggression she suffered, not only from the other parents, but also the children themselves," one branch manager says.

An important fact to keep in mind is that most of the preferred shares and subordinated bonds were sold in small villages where friendship and even family ties between bank workers and victims are inevitable.

CCOO's Valiente can cite a long list of bank workers who do not dare walk the streets now, of many who have left their villages or who have been snubbed by members of their own family at Christmas dinners and even people who have been written out of wills. "The list is interminable," he says. He also points to the additional stress of the ongoing labor force reduction plan at Novagalicia.

But for Valiente, the biggest burden bank employees have to bear is the "sense of guilt" of seeing the lives of those they tried to help in ruins as a result.

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