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.