Antonio Flores’ Blog

Banks must have done something really dodgy in respect of these Russian-roulette swap contracts, because, besides the deluge of rulings tagging these instruments as the epitome of banking misrepresentation, one particular court in Madrid has now issued, at the request of the Banking Services’ Consumers Association, a search warrant in the central offices of the BBVA bank, the second biggest in Spain.

The execution of the measure was set for the 21st of December, since the bank was refusing to provide the court with a list of consumers that had signed up to the protection provided by these contracts against interest rate fluctuations, thinking this was the case. To avoid further embarrassment, BBVA decided to hand in the paperwork a few days before the deadline.

Statistically, I would say that 3 courts out of 4 are now rendering these contracts as null and void since they were sold as an insurance cover in the event of heavy interest rate fluctuations (upwards obviously) but craftily concealed the scenario where, if they went down, the bank would be cashing in. Courts understand that these contracts hid a complex financial-speculative derivative product that has caused thousands to lose millions in favour of banks.

Fortunately for lawyers acting on behalf of victims of this misrepresentation, each bank has a standard contract that applies throughout Spain, so, once a ruling is reached by a Court in respect of say, Banco Sabadell or Caja España, it is very difficult for a claim brought under the same grounds to be rejected by a different court (but may happen, after all, it’s the judiciary!).

So what’s the solution to this then? Well, if you ask me with my lawyer’s hat on, I’d say instruct me! But if you want to give it a go yourself, and give me a miss, this is what I propose:

1. Ask your bank for a copy of the swap contract, in case you don’t have it.
2. Go to the extraordinary website of the Asuapedefin and Apymifid associations and try to find the name of your bank among the 100 or so favourable rulings posted there (the column on the right of the screen). If you can find it, print it.
3. Get a letter out to the bank advising them that, due to the swap contract’s absolute nullity, you will not accept any more withdrawals from your bank account.  I have typed up a letter (see below) that will help you address these issues, and which you will need sent via official channels, i.e. “burofax”, irrespective of whether you hand-deliver or fax it, to ensure acknowledgement of content and recorded delivery, for litigation purposes.
4. If you can personally go to the branch to deliver the letter, do it. If you have found a copy of a ruling against your bank, don’t forget to enclose it.
5. The following can happen once they get the letter:
   1. that they bin it (very likely),
   2. that they make you an offer or settlement, which would normally come in a roundabout way so that you don’t notice that what they’re really after is to sting you once again (likely),
   3. or that they accept tearing up the contract and reimbursing you the sums you have lost so far (very unlikely).
6. If they offer you an offer or settlement, analise it carefully. At this point you need to understand one thing: a derivative contract is an agreement that is known, to financiers, as a “zero-sum game”. This means that one party’s loss is equal to its counterparty’s gain and therefore, the only way for you to win is that the bank loses, and vice versa. So when negotiating, do keep this in mind.
7. If you get really tired of trying to get an answer from the financial entity, then your best bet is to hire legal representation and go to court. This will allow you to get on with your life and with more productive matters.

Documents

• Swap Cancellation Letter to Bank Template (PDf – 121Kb)

Antonio Flores Litigation, Mortgages, Property abusive mortgage clauses, Banco Sabadell, BBVA, Caja España, mortgage clip, spanish swap, Swap Clause