A minutes work - not even in a week and a 400Euro loss

It was back to Jávea Branch of Banco Gallego today (Friday 13th), having written yesterday to the Compliance Dept mcfernandez@bancogallego.com and received no reply, rather like the eMail I sent to the BNPParibas Press Officer that was also ignored.

Luis told me that, even though I told the bank a week ago to sell 51,000 Euros worth of whatever we had (he said they were not 'shares' but then referred to them as 'shares' himself, but I put it down to the fact that English is not his first language) they were still waiting for a potential buyer. I said I'd forwarded to them an eMail from Nordea dated last Friday, indicating that the sale should only take minutes, and for a value of about 64 centimos on each Euro I'd placed with BNPParibas. They claimed not to have received the forwarded message so I sent it again, after I returned home.

Luis tried to explain the Bank's procedure (as if they had one) and I had to remind him that, a week ago, he said he had never sold what I had before! Luis said if Nordea knew of a buyer, he'd like to know, because Banco Gallego could not find one.

Luis - no sign of Branch Director Moises again today - did authorise me to be given a copy of the Branch instruction to Manuel Sancho Muñoz de Verger and Andrés Martinez, to sell 51,000 of what we held (seems they are 'participaciones') and Pedro said he'd been assured that there would be a phone call as soon as a buyer surfaced.

After I'd re-sent the Nordea eMail indicating 'sale in minutes at 64%' I asked Nordea in Luxembourg for their comment on the nonsense I'd been told by Banco Gallego, and received the reply: I just talked to our broker. There is BID prices and volumes. It looks like he could sell 50t @ 62,75 straight away. I don't know what to tell you.

I forwarded those words and the name, eMail address and phone and fax numbers of the writer to Banco Gallego, and wait to see what happens. Our new vehicle still sits in Badalona waiting for Banco Gallego to generate some funds, and the money we instructed them to sell on 5th November when Nordea said it was worth 64% has dropped to 63,21% - a loss of more than 400 Euros. Yes, I know, the dithering by Banco Gallego could have cost us much more, if the market had been more volatile.

Good news can be bad news

Since 5th October Ann and I have made many visits to the Jávea office of Banco Gallego and, because the outcome was always 'positive' there seemed no point in telling this blog.

Knowing our current account was running short of funds, I'd asked for a 'Line of Credit' for 100,000 to be used as needed, over the coming months and years, until the value of the 451,000 Euros we transferred in September 2004, returned to 100%. We were told we would only pay interest (7%) on the amount spent, that would be offset by the 5% we were receiving.

We know that in December, Banco Gallego will debit our current account for 1500 Euros +IVA + charges (approx. 1800 Euros) for LOOKING AFTER OUR INVESTMENTS!! This happens twice a year: June and December.

In the middle of October Moises said he had 'Good News' if a line of credit of 90,000 would be sufficient. We could always ask again, and the 100,000 had only been a stab-in-the dark, so I accepted, and Moises said he would arrange for a visit to the Notary in a few days to sign the paperwork. What a relief. He said we could start using the credit immediately. Might seem strange to most people, but we ordered a DEVELOP A3+ laser photocopier, that was delivered on 16th October.

A few days later, I think it was around the 28th, I went back to see Moises, reminded him that he still had not arranged the date for the Notary, and said we wanted to buy a new vehicle for around 20,000 Euros. Moises said there was no difficulty and typed information into his computer, and confirmed to me that he had told the software to approve the cheque when it was presented.

On 5th November, prior to driving 500 Kms to Badalona to see and buy the car, I took the cheque I had drawn in favour of NordisAuto for 19,800 Euros into Moises at Javea Banco Gallego, and asked what procedure I needed to adopt, so that my cheque would BE LIKE CASH when I handed it to Jesus Hernandez Rodriguez, later that day, in Badalona. Moises explained that I needed a 'Bank Draft' that would cost 20-30 Euros, but that I would need to return, as the Drafts were in the Bank Safe, which had a 30 minute time-clock on it. When I returned, I was told there was a problem "You do not have 20,000 Euros in your account."

Of course I didn't, because the 451,000 Euros due to be returned there on 17th September 2009, had not arrived. Moises then explained that his Head Office Risk Department had rejected the proposal for a 90,000 line of credit, because - as pesioners - they could not see how we could meet the repayments! "If you hadn't still got our 451,000 Euros there would be no repayments!" I told them the solution was to sell 51,000 Euros worth of the Nordea into which BNP had placed our 451,000, but Moises and Investment Manager Luis, said such a decison was unwise. I knew we would only receive ±66% of the value of the 51,000 Euros, but at least I'd not have loan payments around my neck. I felt like THE RICHEST PAUPER IN THE WORLD, with more than 600,000 Euros in property (even at today's value) and 451,000 with BNP, yet with only 2400 Euros in the current account, to last us through to March 2010.

Moises admitted, with Luis present, that he HAD told us our 451,000 Euros would be "5% for 5 years and 100% Guaranteed" in September 2004, and they both explained that Moises had recommended the investent to us, based upon an 'offer letter' from BNP head office, stipulating "5% for 5 years and 100% Guaranteed" and that Moises was not aware that our money was being placed, by BNP, with Nordea, and that our money would be at risk. Two years ago Moises had told us we could not access our money until the 5 years was up.

Moises and Luis said the 'solution' was a 20,000 loan, at 7% (to be set against the 5% we were receiving) so that we could buy the new vehicle, with payments of almost 400 Euros a month for FIVE YEARS. They thought they could get the loan approved and paperwork signed at the Notary at lunchtime. If we waited for the paperwork, we'd not get to Badalona that day. On the other hand, if we stayed to sign the paperwork, and did not like or buy the new vehicle, we would still be committed to the loan repayments. We signed nothing - and set off North, arriving at the dealers 5 hours later.

Soon after Banco Gallego opened on the Friday morning (we travelled back home the previous evening) we went, told them we had paid a 1500 Euro deposit from another account, and had decided to sell 51,000 of Nordea, despite a loss of 1/3. They stressed how unwise it was, because we would lose the 5% interest on that 51,000 if we withdrew it. Ann said we were no longer receiving 5% but Luis insisted we were. Ann said she'd worked it out on a piece of paper on the way to Badalona, based on the fact that 5% of 450,000 Euros would give an annual interest of 22.500 Euros, and she thought we'd actually only been receiving - something like - 3.5%

Luis had other staff calculate the interest we were receiving, using computers and calculators, and gave Ann a piece of paper, indicating that we were only receiving 3.42%.

So, it WASN'T 5 years, it WASN'T 5% and it WASN'T 100%!

They found one reason after another NOT to accept our instructions to sell 51,000 (despite the fact that the amount we would receive had dropped by 900 Euros since the previous day.

In desperation, I took a piece of paper from their photocopier, and wrote on it: "At 10am on 5th November we INSTRUCTED you to sell 51,000 Euros worth of whatever our 451,000 was placed into on 17th September 2004" and both Ann and I signed it and handed it to Luis.

The 'excuses' were dropped, but as they phoned Madrid to see what paperwork was needed, they explained that they would "Offer" 51,000 Euros of Nordea stock on to the international market, but there was no way of knowing when anyone would want to buy, or what price they would offer, whereas with a loan the credit would be in our account straight away. We signed to sell.

An eMail to Nordea in Luxembourg told me that the sale would be within minutes and, currently then, at 64% of original value.

Returning to Banco Gallego for a progress report on Tuesday 10th, we were told that the sale of 51,000 had been authorised but that the paperwork had not been corrected paperwork, dated 5 days after our original instructions.

I wrote to BNP Paribas Press Office

This was the letter I wrote to Pascual Henisse at the BNP Press Office

Hello Pascal

In September of 2004, my wife and I signed a transfer authorisation in the BNP Paribas branch in Javea, with local Director Moises Erades, to move 451,000 Euros from our current account to another, which promised "5% for 5 years with 100% Guarantee". Moises also specifically explained. to my wife and I "It does not matter whether the borse goes 'up' or 'down' your money is 100% guaranteed"

We had a long history of Promo Activos and Treasury Bonds through BNP and BNP Paribas.

We were told by Moises, before we signed, that we could borrow against the 451,000 (as we had done with Promo Activos) should we have need of money, urgently, prior to 17th September 2009.

A year ago we wanted to obtain 50% of the 451,000, but Moises told us the money was tied up for 5 years and we could not use it until September 2009.

In March we asked to borrow 90,000 Euros (against the security of the 451,000 Euros of cash that we transferred) to buy a stress-sale apartment at a 50% saving, but Moises says he still has not received a decision.

By 3rd September 2009, we had discovered that
a) Our 451,000 would NOT be repaid on 17th September. If we redeemed our investment we would lose 150,000 Euros of our retirement savings (we are both pensionistas).
b) We had not been in a 5 year term product of BNP, but a perpetual product issued by Nordea.
c) We had not been receiving 5% interest.

We asked for credit to buy a new car, undertake essential repairs to our home, and make the holiday visit to our son in Thailand and Ann's family in Australia - that we had been denying ourselves for 5 years - but a month later, Moises still does not have an answer for us.

Could you ask someone in BNP to explain our options?

THANK YOU

Clive Read X-0563094-P

The 5th Anniversary

Thursday 19th September 2009 was the date we'd expected to receive back, 100% of the money we transferred from our BNP Current Account into a "5%, 5 year, 100% guaranteed" product, 5 years earlier. In the two months prior to transferring the money, we'd suggested other products BNP had advertised, but the Branch Manager, Moises Erades, advised against them "because they've all gone" or "because there is a risk".

When we'd asked, in the Autumn of 2008, what the penalty would be to redeem 50% of the money, Moises told us it was impossible, as we could not touch the money until the end of the 5 years. A year later he claimed it had always been a 'perpetual' product and he had no idea why we thought we'd get 100% of our money back in 5 years, with 5% interest.

In March we asked to borrow against the security of the money, so that we could take advantage of a 'stress sale' of a property along the coast that offered a 50% discount, Moises wrote back:

From: 2101-Jávea(Moises Erades Sart)
Date: 3 de març de 2009 9:23:16 GMT+01:00
To: "Clive Read"
Subject: RE: PRESTAMO

Hola Sr. READ:

He pedido autorización a los servicios centrales:
Cuando tenga respuesta se lo comunicaré.
Saludos.

which, in English, told me
I requested authorization from headquarters:
When they answer I will communicate.

6 months later, and with many visits to ask for news, there is still NO DECISION.

We asked Moises on 3rd September to request permission for "a line of credit" to tide-us-over until we COULD get our money back and he said we'd know in a week. I called a week later but he had no news and said he would contact me when there was a decision. It was agreed that his bank would tell us HOW MUCH credit they were permitted to grant.

BNP's Manager mis-sold us a product as "5%, over 5 years with 100% Guarantee" that was NONE of those things.

5% is not 5% and 5 years in forever with NO Gurantee

On Wednesday (2nd September) we met with Moises, the Manager. On the previous day Luis, the Investment Adviser said he would be present, but he was kept outside of Moises's office during our visit.

I asked Moiseswhether the 451,000 we'd transferred to BNP in September 2004 would be returned on 17th September 2009 - the end of the 5 year term, but Moises said "No" because their value was too low and, in any case, it was not a 5 year term.

I showed him my eMails, and one he'd received on our behalf from Enrique Castellanos, a Spanish friend in Valencia and former Director of one of Spain's most important banks, dated:

3rd February 2009
26th February 2009
12th March 2009 (in Spanish fro my banker friend)

all of which referred to "5% for a 5 year term" and asked why, if it was not a 5 year term, Moises hadn't replied to Enrique and I and pointed out our misinderstanding. Moises shrugged his shoulders.

When we wrote to Moises and then saw him a year ago and asked what the penalty was if we redeemed some of our shares early, as we needed the money, he said that we could not sell until September 2009, which was the end of the 5 year term.

We wonder why he is changing what he is telling us?

In 2004 we were told "5% over 5 years with 100% Guarantee return of 451,000 on 17th September 2009"

and yesterday, when I was suggesting that if there had been a profit - and the product had risen to 160% - BNP would have kept the profit so why should BNP not make the loss, Moises told us that if the value had risen to 160% we would have been paid out 721,600 Euros. (Plus we'd have been receiving 5% interest every 6 months): a total of 834,350 Euros!!

We bought on the basis that we would get 5% plus our MONEY BACK - no more and no less. No profit - no loss.

What is the TRUTH about what we would have received if the Nordea Bond now stood at 160% of its September 2004 value and we decided to sell?

Moises said he would apply for 'credit' on our Banco Gallego account, against the security of the 451,000 and would have a decision within about a week. He said we would incur an arrangement fee cost of 1,500 Euros and 500 for the Notary. We thought that was a lot to pay to borrow money to which we thought we'd be entitled in 3 weeks time. I asked what had happened to the application he said he'd made in March, and to which I'd had no decision. Again, Moises shrugged his shoulders.

When I arrived back home, I found a graph from Nordea indicating that the investment recommended by Moises in September 2004 had consistently dropped in value since 2 months after we invested, and had dropped as low as 22 cents in the Euro. It was currently trading at 67 cents.



I phoned BNP Paribas in Madrid, who told me that had I put my money into BNP Protected Plus F.I. the 451,000 Euros would not have paid us any interest, but instead of losing 33% of its value, it would return - at today's level - 487,000 Euros. It would have gained 8.36% over the term - or 1.7% a year - rather than the currentlv 30% LOSS on the investment recommended to us by Moises as being WITHOUT RISK.

We checked on the interest we'd received on our 451,000 Euros and discovered that we'd never received the expected 22,550 each year, and wonder if the 5% guaranteed interest was based on the actual value of the money during the 5 years, rather than the amount we'd transferred. We'd thought that 5% a year on 451.000 Euros over 5 years would be what the words say.

We'd always had good service and a reasonable return on the many BNP funds in which we had placed our money, and with so many GOOD, RELIABLE and STABLE BNP products, we wonder why Moises recommended us to Nordea, which has been in perpetual decline until the March crash, but is now recovering?

5% for 5 years, 100% Guaranteed

After we sold a property we'd owned in Jávea, we put the proceeds into the BNP Bank account we'd opened on the advice of Roy Turner (Crown Constructions), through whom we'd bought the property in 1985. Moises Erades, the Bank Manager phoned to tell us there was a no risk opportunity to gain interest on the money for which we did not need immediate access. He said he'd taken an option on 600,000 Euro units for us, and we transferred the money from our account to BNP to buy 451,000 Euros worth. The terms were what we needed: 5% Interest, over a 5 year period, with 100% of our money repaid at the end of term: 17th September, 2009.

We'd kept sufficient money in our current account to live on for 5 years, but were told by
Moises Erades that - should we need to spend more - we could borrow from the Bank against the security of the 451,000 Euros, as we had done over the previous 15 years with BNP promoted Treasury Bonds.

We'd been offered a BNP Mortgage when offered a house at Vergel to buy, but as the paperwork was incorrect, we rented there instead. It took 9 years - until 2007 to rectify the paperwork - by which time the BNP offer of a Mortgage was withdrawn, as I was older than 65 years of age. The only way we could complete the purchase was buy from money set aside for our living expenses.

As our money began to deplete we went back to Moises to borrow against the 451,000 Euros invested with BNP. By this time, our bank account (and Moises, Pedro and Fina - the staff) had been 'sold-on' to Banco Gallego.

Moises told us that "in his opinion" - not that of his Bank - we would NOT get our money back in September 2009, but might have to wait a further 2 or 3 years. He also told us we could not borrow because the investments had lost so much money "But I will see what I can do if you come back next month."

And so we did, for a year - a year in which we discovered that our 451,000 had been placed with Nordea, in a perpetual share, that had dropped to as low as 22 centimos on the Euro for every Euro we'd invested. To add insult to injury, the Bank was charging us 1,500 Euros + VAT/IVA every 6 months for 'looking after' our money.

Nordea have been VERY helpful to me, allowing me to understand that BNP Paribas has sold me a 5 year guarantee, for 451,000 Euros they had placed with Nordea who gave NO GUARANTEE. Currently (28th August) the Nordea units are trading at 68% of what we paid for them?

The new advertising slogan for BNP Paribas describes them as

The Bank for a Changing World

We liked it best in the World where 100% guaranteed repayment on 17th September 2009, meant what it said!

Are we unique or are there others who were misled by the words:
5 years at 5%, 100% Guaranteed?