Spanish courts are investigating a number of cases of financial fraud affecting British expatriates living on the Costa del Sol and Costa Blanca.
The cases centre around the Luxembourg bank, Landsbanki Luxembourg S.A., a subsidiary of the recently nationalised Icelandic bank, Landsbanki. The bank allegedly offered “equity release” products to foreign pensioners living in Spain which involved monies being invested in various financial products marketed by the same group. The scheme was sold under the guise of partial equity release or schemes which reduced ones exposure to Spanish inheritance tax.
Landsbanki claimed that funds released under a mortgage would be invested through their Luxembourg based insurance company, Lex Life and Pensions S.A. in various off-shore high return ‘no risk’ funds or bonds which would generate sufficient income to cover any mortgage interest.
Pensioners having availed of the scheme now face financial ruin. Their properties are now fully mortgaged and they will have to meet on-going mortgage interest costs and their Landsbanki financial investments have substantially lost all value. Most are not in a position to meet the on-going interest costs and face having their homes repossessed and being made homeless.
Landsbanki is being accused of misleading publicity and financial fraud. The investment products would never, even in an upward market, have been able to achieve the financial yields advertised.
The Luxembourg branch went into liquidation in December 2008.
