AN expat is taking Denmark’s biggest bank to court after it convinced him to use his Marbella mansion as collateral in an equity release scheme.
Euan Armstrong, 73, is in litigation after the scheme left him almost penniless with the bank trying to force him to sell his two million euro home to pay off debts. The pensioner had joined the Danske Bank scheme believing it would give him a salary for life, as well as reduce inheritance tax for his daughters – who would be liable to pay Spain’s top rate of 34 per cent.
But Armstrong, originally from Scotland, now faces losing his home. “The whole case is a mess of illegal contracts, bad investment and a loss of clients money in spite of Danske Banks’ huge profits,” Armstrong told the Olive Press. “We must stop these banks stealing our money.”
Armstrong claims he was convinced by three employees in the now-shut Mijas branch that taking out a million euro mortgage would reduce his two daughters Caroline and Kristen’s inheritance tax liability by half.
Within the plan Danske Bank was supposed to use 850,000 euros to invest in bonds, Swiss Francs and Euros with the ‘profits’ being used to pay off the mortgage. Meanwhile, a 150,000 euro lump sum would be given to Armstrong as part of the equity release deal.
However things did not go to plan. After the first year Armstrong realised that the bank had actually lost him 18,000 euros. “And then for the next five years it continued to lose money and in 2009 I was told by an account manager in Luxembourg that I should sell my property and pay the bank back the 650,000 euros they had lost.” When he refused Danske Bank issued a foreclosure on his house and also a repossession order through Coin court, which would have taken place in July.
Fortunately however, his lawyer stepped in and obtained a court ruling suspending the repossession. According to boss Antonio Flores, of Lawbird – who is also filing eight separate cases against various Nordic banks in a similar situation – it is actually illegal to indebt yourself in order to reduce your inheritance tax liability.
Nonetheless, he estimates that hundreds of people fall victim to these schemes. “This type of product, peddled by unauthorised agents under the auspices of supposedly reputable banks is becoming more and more common and should be avoided at all costs,” he explained. A Danske Bank spokesman said: “According to the law we cannot comment on individual customer cases nor questions related to individual cases.”
The investigation continues.