Investing in the stock market for the first time turned out to be the biggest financial mistake Carlos Macias has made in the 37 years since he was born.
Along with more than 350,000 other Spaniards, Mr Macias, who works nights at a fish wholesaler in Madrid's food market, was convinced by his local bank Caja Madrid to buy into last year's €3-billion initial public offering of Bankia, a merger of seven savings banks – including Caja Madrid itself.
"Imagine our surprise when we found out that they knew the bank was bankrupt," says Mr. Macias over a morning coffee after work. Less than a year after the IPO, the shares have collapsed and the government is nationalizing Bankia in the largest bank bailout in Spain's history.
Mr Macias and his wife invested €37,000, their life savings, in shares that are now worth a quarter of the purchase price and could fall further still.
The Bankia saga has prompted thousands of angry savers to consult lawyers and pressure groups, and is expected to lead to a flood of lawsuits that will cause new headaches for the government, as well as for banks and regulators already struggling to deal with the euro zone's sovereign debt crisis.
This and other cases involving billions of euros worth of products sold by Spanish banks to their retail clients will complicate any effort by bank managements or European regulators to impose losses on shareholders and bondholders to reduce the bill paid by taxpayers for bank bailouts.
The debacle at Bankia, however, is merely the latest and most grievous blow inflicted by banks and cajas on Spaniards who were sold or mis-sold loss-making financial products by their local branches.
In March, a court in Alicante ruled that Santander should return money to a client who invested in its so-called valores bonds, of which it issued €7-billion in 2007 to finance the purchase of its share of ABN Amro.
The Santander bonds are typical of the controversial convertible products sold by many Spanish banks, except they are due to convert into equity at a fixed price of more than €13 per share in October – and because Santander shares are now worth just over a third of that, the 139,000 retail clients who bought them stand to lose most of their capital.
For the past three weeks, however, it is Bankia that has spawned protests by customers and their lawyers.
Floated only in July last year, Bankia initially reported a €309-million net profit for 2011. Last month, the bank restated its accounts to record a €3-billion loss and said it needed €19-billion in new capital from the state – a need for cash that triggered Spain's request for a bailout from the European Union a week ago to help it recapitalize its banks.
The roots of Spain's banking crisis in the property bubble are by now well understood. But such knowledge is no comfort to bank customers who thought they were parking their money in safe investments. The Macias family, for example, say they were told that Bankia shares would earn income of 7 to 8 per cent in the form of dividends.
"Nobody would have made an investment if they had been warned that it was an institution at great risk of being taken over and rescued," says Angel Fernandez, adviser to Aemec, a Spanish shareholder association.
Aemec is among the groups planning a civil action against Bankia, and possibly its investment bankers, on the grounds that its prospectus "did not reflect the true financial situation" of the company – the first such legal action in Spain, Mr Fernandez says. The public prosecutor has launched an investigation into five possible crimes at Bankia, including fraud, false documentation and embezzlement.
Says Jorge Mora, a legal adviser to an association of bank and insurance customers: "We are preparing a battery of measures in the near future. It's a completely zombie bank."
Bankia's new management declined to comment on the legal cases.
Mr Macias, meanwhile, expects to be party to a case brought by Aemec on behalf of shareholders.
"What we are going to claim is that the price of the IPO was completely false," he says. "The people who have suffered are ordinary people."