When Felix Valls followed his bank manager's advice and invested his entire savings in the bank's stocks, he did it without thinking.
It was a simple question of loyalty.
After all, how could he doubt the local bank that opened an account for him just after he was born in 1935 with a gift of 5 pesetas, a small fortune in those days, as a sign of respect to his parents, who were life-long customers? Now the 77-year-old Valls feels betrayed as he finds himself locked out of his hard-earned money.
"I don't understand what's going on," he said. "The only thing I want is for them to return what is mine."
His plight is shared by thousands of his fellow townspeople and nearly a million across Spain: Lured by the family-like ties nurtured between bankers and customers, they poured their life's savings into higher-yielding financial instruments recommended by the people managing their money. When boom turned to catastrophic bust, they found the stock they had acquired had become all but worthless.
Once-lifelong friendships have turned to enmity, as victims cry treachery. In some towns, angry customers have burst into bank branches with shotguns and yelled death threats. Despair has set in as many of the victims are elderly people who were depending on the money to fund their last years.
In towns like La Vall D'Uixo, bank employees and customers would often have close relationships, sometimes going out to have coffee and other times finding themselves sitting together at school plays.
But those times are over.
Jose Romero has spent nearly four decades working at Bancaja, a regional savings bank that is now part of Spanish banking giant Bankia. He said relationships with clients have recently become very tense and sometimes have hovered on the verge of violence.
"The client trusts the brand, but the employee even more," Romero said. "But when you touch their money, people change radically. We've seen death threats, insults, people who come in with shotguns."
Romero heads a Bancaja union and he has seen an increase in the number of complaints from employees who feel they can't go out on the street because they are scared.
Spain's Confederation of Savings Banks declined to comment on gun incidents at bank branches and said all investors in the bank stock had to authorize purchases by signing contracts containing "brief and non-technical language" about the risks they were agreeing to take on. The confederation added in a statement that investments in "preferred stock" were sound when introduced but their value was hurt by market conditions and Spain's deteriorating economy.
Preferred stock entitles the holder to a fixed-rate dividend, paid before any payouts are distributed to holders of ordinary shares- common stock. Holders of such preferred stock also rank higher than ordinary shareholders in receiving proceeds from the liquidation of assets if a company goes into court protection.
Romero, like most of his colleagues, sold preferred stock in his bank and believed at the time that he was promoting a good product. They were first offered at the end of the 1990s at a time of economic boom and many people benefited from the returns. The problems started when people started signing up between 2007 and 2009, just as the bubble was bursting.
"There was a market that worked at the time and had good returns," he said. "But the crisis came suddenly and it all collapsed."
The country's financial crisis has already yielded many dark milestones, including 25 percent unemployment and home foreclosures on an unprecedented scale. Add to that the scandal of up to 1 million Spaniards whose money is frozen or have been lost after banks allegedly mis-sold them complicated financial products.
The crisis has hit especially hard in La Vall D'Uixo, about an hour's drive north of the eastern city of Valencia.
Some of the town's residents have been denied access to investments that represent their life savings, while others have simply found their nest egg has become worthless because of the collapse of share prices. Up to 1,500 families in the town of 34,000 have been affected. They say they are victims of banks that sold them products that promised generous dividends, but have delivered financial ruin at the height of the crisis.
Vincente Porcar is fighting for €70,000 (about $90,000) that his 78-year-old mother, Francisca Molina, inherited when her husband died. Molina said that rather than offering something ultra-safe like a savings account or a certificate of deposit scheme, their local bank offered them preferred stock in the bank and made it seem like they had a fixed rate with no risk attached.
So, she signed up for them and watched the money grow.
But there was a catch.
"We wanted to buy a house and when we went to ask the bank for the money," Porcar said, "they told us we couldn't touch it."
That's because while the preferred stock offered a high 7 percent return, they never expire; therefore, to get rid of them, there must be another buyer. Spain's dismal economy has sent the value of the shares plummeting, meaning there's nobody willing to take the shares off the townspeople's hands — effectively leaving them in limbo. Not only that, banks faced with toxic loans and near-worthless property on their books, can no longer make good on their promise of high returns.
The majority of those affected are small investors like Porcar's family, not bankers or hedge funds.
Now, Spain's government is cracking down on the selling of financial products, but it won't guarantee that the nearly 1 million cash-strapped Spanish investors will get all their money back. On the other hand, the banks that sold them are the same ones that are benefiting from a €100 billion (about $130 billion) lifeline from the 17-nation eurozone.
The European Union recently announced that nationalized Spanish banks that need such funds from Brussels should convert preferred stock into more liquid common stock with a discount of around 40 percent, which would mean huge losses for thousands of savers.
Most Spaniards have traditionally stayed away from investing in stocks or mutual funds to build savings for the future. Instead, they have invested in real estate and relied on the advice of managers at "cajas," the equivalent of local savings and loans banks, which have virtually disappeared in the U.S.
Many Spaniards like Valls and Porcar have joined associations that are suing the banks. One of them is called Apacbank, which represents hundreds of Bankia clients who have had their money frozen. Apacbank says many investors signed legal documents thinking that there was no risk and believing the word of their local bank.
"The majority of them have subscribed to 'preferential shares' not thinking in a million years that it was a financial product with this risk attached," Apacbank spokesman Salvador Sastre said. "They are victims, and the banks knew that they were committing a massive scam."
Preferential shares are legal in Spain and other countries in the world. But Spain's banking system has been especially decimated — causing a complete collapse of the market in these shares.
Most people affected in Spain are over 60 and are small investors concentrated in towns throughout Spain where there are few banks and practically all belong to savings banks.
It's been a big blow to this formerly prosperous town just inland from the Mediterranean. La Vall D'Uixo was once famous in Spain for its Calzados Segarra factory, which exclusively produced boots and other footwear for the country's armed forces starting in the early 20th century. But the factory shut down in the early 1980s, leaving the town to subsist on small industry like agriculture — primarily orange plantations — and ceramics.
Empty, derelict warehouses from the factory are the first thing to greet visitors to the town. But even more depressing is hearing the stories of people like Porcar and Valls, who were banking on preferential shares as a financial cushion during hard times.
"I just want to recover my money," said Valls, who depends on a small pension plan. "I still can't understand how a scam like this can be permitted."
Porcar darkly hints at more drastic measures.
"I'm ready to go to jail," 41-year-old said. "Nobody messes with my mother's money."