Alpha Jersey Bond Case

In 2003-2007 Alpha Bank issued through its subsidiary company Alpha Jersey (with registered office in the island/States of Jersey),perpetual bonds amounting to more than 1 billion euro, which it then distributed horizontally through its branches to the total of the consumers/prospective investors, regardless of whether the latter were aware of what they were buying or not.

Indeed, it would be quite difficult for the average investor, who is seeking to secure his money, to comprehend that the product the Bank itself was promoting as being issued by the same, guaranteed by the same and which, moreover, was to be recalled after 10 years and the investor would redeem his money, was actually:

  1. perpetual
  2. perpetual, as it has no maturity date
  3. it has been issued by a shell-corporation with registered office in the Island of Jersey with no assets
  4. the mentioned guarantee applies, provided that the issuer accepts to pay; in a different case, there is no guarantee
  5. the payment of interests may be cancelled if the Bank faces a capital problem; meaning that it is not true that even in the worst case scenario one shall be receiving the interests indefinitely, as the recall after ten years is in the discretion of the issuer (the shell corporation with the registered office in Jersey) and has no obligation to do so.
  6. such products holders in the event of liquidation are ranked at the bottom of the creditors list without any privilege

Later, in mid-2010, Alpha Bank redeemed the Alpha Jersey securities it held (amounting to more than 300 million) at their par value when issued (i.e. 100%) and not at the current stock market price which was at +-50%. Within the same year, Alpha Jersey (and therefore Alpha Bank) announced that due to the aggravation of its financial condition it would not pay any coupons in 2010 (as it has not done until this day);to wit after paying in full the bonds the same held, which constituted 1/3 of the total of the issued by Alpha Jersey bonds, it announced its financial incapacity to pay the interests to the rest. Essentially, the Bank made a selective redemption of the bonds it held, at the 100% of their value (although negotiating at half of that), leaving the remaining holders of Alpha Jersey securities in a stalemate.

Following the above, a subsidiary company of Alpha Bank made in 2012 a buyback offer for the 40% of the securities value issued by Jersey, while in 2013 Alpha Bank made a new offer for 35%. The majority of the Alpha Jersey securities holders accepted the aforementioned offers as they had found themselves financially in a deadlock, precisely because:

  • either the securities had no maturity date and therefore no maturity guarantee, which is why there is no provision for the return of 100% of the money that had invested,
  • or, those who were aware of the fact that there was no maturity date, realized that in any case they would not receive any coupons indefinitely as, since 2010 and thereafter, and after Alpha Bank had already redeemed its own bonds, it had already stopped paying the coupons, while in the buyback offers it was mentioned that there would be no payment of coupons due to Greece's financial condition.

For the holders of such hybrid-perpetual bonds of Alpha Jersey, who were deceived concerning the real properties of said products and specifically:

  1. that they were subordinated bonds
  2. that they were not issued by Alpha Bank but by another company-SPV with registered office in Jersey,
  3. that Alpha Bank's guarantee is subordinated and is valid only if the principal issues an order,
  4. that the interests are not obligatory but they may be cancelled or to be more accurate, that they are the first to be cancelled if the Bank is in capital shortfall,
  5. that they suffered a discriminatory treatment as holders of securities which were similar/commensurate with those which Alpha bank redeemed selectively at 100% of their value, while in the stock market it negotiated them at half that value
  6. whether they accepted the buyback offer or not

Our firm shall institute class actions claiming the amount of the damage the holders of said securities suffered. The amount is determined as follows:

  1. if they accepted the buyback offer we request for the difference between the buyback offer and the money they invested at the bond's purchase
  2. if they did not accept the offer, the entire amount they invested.

In both cases, loss of profit from the interest generation during all these years, shall be added to the amount as well as an amount for non-material damages added at the final amount.