Branch Banking

As the caja de ahorros at which the writer does most of his banking continues to insist that he should be investing in their participaciones preferentes, he has made up a list of the pros and cons of moving himself further out on the branch of the tree of risk in search of those tender green shoots of yield.

Against...

1). The perpetual term;
2). The clause that says that if they lose money in a given year, they don't have to pay the dividend for that year, ever;
3). That they are only showing profits at the indulgence (or insistence) of the governor of the Bank of Spain;
4). That if the above governor gets bored with the reluctance of the cajas to merge with others, he may suddenly not accept their book keeping fictions at some point in time;
5). That rating agencies are generally classifying these securities as 'junk', implying that a fair yield would be upwards of double what is usually being offered.

For...

1). The 7.5% coupon for the first two years, if compared with the 3-ish that government guaranteed term deposits are currently paying;
2). The free chainsaw with every subscription.

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