Fighting the actors of financialization and prohibiting profit on illegitimate private and public debt

22 September 2020 by CADTM , Collective , Virginie de Romanet , Renaud Vivien , PAH , Antonio Gambini , ACiDe , Vicente Losada , Eva Betavatzi , Gilles Grégoire , Spanish Platform against vulture funds , Mats Lucia Bayer , Walter Actis , Ángel del Castillo , Mari Ángeles Bueno , Roberto Moreno , Miguel Vázquez , Pedro Martin Heras

In January 2020, the “Package of common demands on debt and the need for citizens’ control of finance at the european level”, coordinated by CADTM, was published. This document was written collectively by activists of nearly fifteen collectives and organisations across Europe. It was signed, in whole or in part, by 39 associations from 10 European countries.

The release of this European demand booklet was overshadowed by the coronavirus health crisis. However, its content is more relevant than ever. Indeed, given the levels of public debt that have reached new heights and given the announcements made by governments of new austerity measures; given the opportunity seized by the financial world to sneak its rescue by the States and to pass on to them the billions of euros of debt on which it has speculated in recent years; and given the growing scale of the current economic and social crisis. It is more urgent than ever to respond to the debt blackmail and to collectively seize all sectors that are for the common good and their means of financing. This is precisely the purpose of the demands made in this demands paper.

We are now republishing, in an order than mostly depends on the circumstances, each of the chapters of this document. This first chapter published separately (which is in fact chapter 4 of the document) deals with the urgent need to respond to the privatisation of the health and housing sectors and the role of vulture funds in the destruction of these sectors in Europe.

Contributors: Antonio Gambini (CNCD - Belgium), Eva Betavatzi, Renaud Vivien, Gilles Grégoire and Mats Lucia Bayer (CADTM Belgium), Vicente Losada, Walter Actis, Mari Ángeles Bueno, Ángel del Castillo, Roberto Moreno and Miguel Vázquez (Spanish Platform against vulture funds Vulture funds
Vulture fund
Investment funds who buy, on the secondary markets and at a significant discount, bonds once emitted by countries that are having repayment difficulties, from investors who prefer to cut their losses and take what price they can get in order to unload the risk from their books. The Vulture Funds then pursue the issuing country for the full amount of the debt they have purchased, not hesitating to seek decisions before, usually, British or US courts where the law is favourable to creditors.
), Pedro Martin Heras (Platform of those Affected by Mortgages, PAH – Spanish State), Virginie de Romanet (CADTM Belgium, ACiDe Bruxelles – Belgium)

The growing hegemony of financial actors and capital, due to the process of financialization discussed in Chapter 6.d., gives them control over individuals, companies, corporations and governments. Markets thus determine the objectives to be achieved. Among them, many actors compete and collaborate: companies, individuals, and even governments, with their shared objective being of maximizing profits. A number of banks, pension funds Pension Fund
Pension Funds
Pension funds: investment funds that manage capitalized retirement schemes, they are funded by the employees of one or several companies paying-into the scheme which, often, is also partially funded by the employers. The objective is to pay the pensions of the employees that take part in the scheme. They manage very big amounts of money that are usually invested on the stock markets or financial markets.
, venture capital funds, insurance companies, investors, etc., invest borrowed money to generate profits at the expense of workers, pensioners, people excluded from the labor market, migrants and other people in precarious situations, etc.

States and households bear the brunt of financial bubbles

Financial agents have played a central part in the crisis that has affected Europe for more than a decade. A comparison of the evolution of private and public debt since the 2000s reveals the extent of their activities. The debts of financial corporations increased steadily between 2000 and 2007, [1] as well as the debts of households [2] and non-financial corporations Non-financial corporations All economic agents that produce non-financial goods and services. They represent the greatest share of productive activity. , [3] benefiting in particular European banks, while the public debt ratio fell over the same period. [4] After 2007, public debt ratios increased from 66% to 82% in 2011 for the Eurozone as a whole, while the private debt of households and non-financial corporations has increased very little since 2007. [5]

Before 2007, financial institutions, banks in particular, thus created huge credit bubbles which they did not take responsibility for. European governments paid the price, which accounts for the increase of public debt after 2007. We can claim that private debts, which financial corporations had created from scratch, partly turned into public debts through various processes including the notorious bail-outs, i.e. bank recapitalization Recapitalization Reconstituting or increasing a company’s share capital to reinforce its equity after losses. When the banks were bailed out by the European States, they were most often recapitalized with no conditions attached and without the States having the decision-making power their participation in the banks’ capital should have given them. by States, a process that was supported and encouraged, when not actually imposed, by European institutions. Other forms of concealed recapitalization appeared later (see Chapter 2.a).

Credit bubbles generated by loans of all kinds abusively granted by private banks, particularly to households in the most troubled countries (Greece, Spain, Portugal, Ireland, Cyprus), very quickly exploded. The consequences of these phenomena have been and continue to be extremely serious: expulsion, exclusion, loss of rights - the right to health, education, housing, social security, etc. Household incomes are falling as household spending increases to offset state budget cuts and the liberalization of the economy in a wide sense. Finally, we are witnessing a multiplication of non-performing household loans (loans that risk not being repaid) leading to a private debt crisis which benefits vulture funds, the speculative investment funds Investment fund
Investment funds
Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity.
that derive lucrative profits from financial crises.

The part played by vulture funds

Vulture funds are specialized investment funds. Their investments bear on defaulting debts. They thus acquire debt packages, shares and bonds at discounted prices from banks, companies or governments, and then demand a full repayment of the value of the debt. They operate in areas where economy is in turmoil and consequently benefit from low asset Asset Something belonging to an individual or a business that has value or the power to earn money (FT). The opposite of assets are liabilities, that is the part of the balance sheet reflecting a company’s resources (the capital contributed by the partners, provisions for contingencies and charges, as well as the outstanding debts). prices.

In the case of companies, vulture funds seek access to control and management in order to carry out internal reorganization operations, generally through the sale of assets or the reduction of staff, with a view to rapid capitalization. More and more vulture funds are involved in the management of public services. They are thus operated in ways which depart from their founding principles of equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. and also efficiency, driving them towards the corporate business model.

Some vulture funds, typically registered in tax havens, specialize in the low-cost purchase of old public debt securities because the government involved has already defaulted or is about to default. Refusing to participate in the restructuring operations of the government involved, these funds then multiply legal proceedings in different jurisdictions against that country, in order to obtain payment equivalent to the sum of the principal, accumulated interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. , late penalties and sometimes even legal costs. Considering the difference in price between the initial discount on securities purchased on the secondary market Secondary market The market where institutional investors resell and purchase financial assets. Thus the secondary market is the market where already existing financial assets are traded. and the amounts requested and obtained from the courts, the profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. rates of vulture funds vary between 300% and 2000%, to the detriment of populations and their fundamental social rights.

 The right to health is threatened by vulture funds in the Spanish State

Threat on public health

Investment funds are more and more involved in the health sector. They adopt the same strategy as when they purchase sovereign debt Sovereign debt Government debts or debts guaranteed by the government. : they buy and “sanitize” the companies (cutting wages and expenditure) and afterwards they sell them to the highest bidder.

The interest of hedge funds Hedge funds Unlisted investment funds that exist for purposes of speculation and that seek high returns, make liberal use of derivatives, especially options, and frequently make use of leverage. The main hedge funds are independent of banks, although banks frequently have their own hedge funds. Hedge funds come under the category of shadow banking. is not to improve the health of the population, but to obtain the best profits for their shareholders. Unless unfettered competition in public health can be guaranteed, a vulture fund will not invest.

What are the consequences of that strategy?

  • The reduction of spending in partly public hospitals to the advantage of privatized hospitals, which has a direct impact on the quality of patient care, makes working conditions more precarious and leads to a reduction in the number of employees.
  • These companies have access to the data of all patients in the public health system treated in their hospitals, which means that our personal data are not protected.
  • Health-related data could be used by private health insurance companies to deny some patients the right to take out an insurance policy.
  • Most vulture funds are located in tax havens, which means a loss of revenue for the State.

Public-private partnerships: a way of privatizing public hospitals

Since 2004, two models of administrative concessions have been developed in the Spanish State, mainly in the municipalities of Valencia and Madrid: the PFI (Private Finance Initiative) model and the PPP (Public Private Partnership) model.

The PFI model generally applies to private companies – mostly building companies at present involved in legal proceedings – that carry out and finance the construction of hospitals under a public works concession contract, in exchange for which they collect annual rental charges for the building and also, more recently,provide non health services for a period of 30 years.

In the case of PPP hospitals, both health services and non health services are entirely managed by a private company (see also Chapter 2b on PPP).

For this to happen, health administrations concede complete or partial privatization of public hospitals by selling them to private companies. The private companies then sell their shares to hedge funds. The case of Spain is a telling illustration.

The exponential number of vulture funds that have invested in the health sector is alarming. Here is a table with a non-exhaustive list of investments over the past few years in the Spanish State:

Hospitals belonging to the public health system
Year of investment Hospital / Area Type of concession Vulture funds
2013 Hospital del Henares
(Coslada) / Madrid
PFI The global group Sacyr sold it to LBEIP BV (Lloyd’s Bank European Infrastructure Partners) with LP, or Limited Partnership, as a single shareholder.
2014 Hospital Infanta Cristina
(Parla) / Madrid
PFI Sacyr also sold 49% of its shares in the company in charge of non health management to LBEIP BV
2014 Hospital Puerta de Hierro
(Majadahonda) / Madrid
PFI Iridium (a subsidiary of ACS) sold its shares to the Dutch investment fund DIF
2016 Hospital Puerta de Hierro
(Majadahonda) / Madrid
PFI Sacyr sold its shares in the hospital to the same fund
2016 Hospital del Sureste
(Arganda) / Madrid
PFI Construction companies FCC and OHL sold their shares to the British investment fund Aberdeen Infrastructure (formerly LBEIP)
2017 Hospital del Sureste
(Arganda) / Madrid
PFI Globalvia (including Bankia and FCC) also sold its shares to Aberdeen, which then held 100% of shares in the hospital
2019 Hospital Álvaro Cunqueiro
(Vigo) / Galicia
PFI Concessia, a company dedicated to "investments in infrastructure and public concessions", under majority control of six banks, Bankia, BBVA, Sabadell, CaixaBank, KutxaBank and Ibercaja Banco, sold 16.67% of its shares to the RiverRock fund, located in Luxembourg.

In the Spanish State, following attempts to privatize the public health system and PFI hospitals since 2012, a wave of protests started in Madrid and spread to most of the country. It was called la marea blanca (the white tide) and was supported by patients and health workers.

Private health care

Toutefois, les fonds spéculatifs n’ont pas agi exclusivement dans le domaine de la santé publique. Cela s’est également produit dans le secteur privé de la santé. Le tableau suivant montre certains des cas qui se sont produits dans ce secteur.

Private hospitals
Year of investment Hospitals / Areas Vulture Funds
Hospital de La Ribera
(Alcira) / Valencia
The main shareholders are Centene Corporation (50%) and Banco de Sabadell (50%, managed by the investment fund Bansabadell Inversió Desenvolupament SA). The board of Ribera Salud also includes the venture capital fund Aurica XXI SA.
Since 1st April 2018, under the new government, this hospital has been returned to the public sector and is managed by the health department of the municipality of Valencia (Conselleria de Sanitat Universal i Salut Pública).
2016 Hospital Domínguez de
Pontevedra / Galice
Repurchasing by CVC Capital Partners.
2017 Quirónsalud On 1st January 2017, Fresenius bought Quirónsalud, the main shareholder being the venture capital fund CVC Capital Partners.

The case of Quirónsalud

This giant of the Spanish private health system is also in the lead when it comes to managing public hospitals under concession. With a 14 %, share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of the market, it is the fourth operator in Europe and the first in Spain.

The buyout of Quirónsalud by Fresenius Helios is a perfect case study of financialization of the health sector. The following table presents the various financial actors involved in this repurchase:

Capio, [6] owner of private clinics and hospitals Became notorious after the Marea blanca wave of protests
CVC Capital Partners – hedge fund Sold Ibérica de Diagnóstico y Cirugía (IDC) to Capio in 2005.
IDC Salud CVC became a shareholder anew in 2010 and the company was rebaptized IDC Salud.
Doughty Hanson – venture capital fund Merging of USP Hospitales with Quirón in 2012.
Quirónsalud Merging of IDC Salud with Quirón in 2014, with CVC Capital Partners as main shareholder.
Fresenius Helios [7] – a German group investing in the health sector Repurchased Quirónsalud in 2017.

The table clearly shows the process of financialization. Capio bought IDC from CVC Capital Partners, CVC became a shareholder in IDC, which became IDC Salud, which merged with the hospital group Quirón (itself the result of a merger under the auspices of the Doughty Hanson fund) and was later purchased by Fresenius Helios, all within a couple of years. These operations resulted in CVC Capital Partners garnering €2.6 billion profits.

Where do such huge benefits come from? The answer is obvious – and deplorable: they come from public resources, which provide both patients (via social security contributions) and money. In short, tax payers pay for those very speculators who contribute to the degradation of public health care.

Old people’s homes

The World Health Organization (WHO) recommends the creation of specialized centers that can accommodate at least 5% of the total number of over 65 year old. In Spain, the average (4.11%) is below the recommended coverage rate. Over the whole of the Spanish State about 73% of residences are private and only 27% public.

Over the last few years, old people’s homes have attracted major investment groups. DomusVi, Amavir, Sanitas Mayores, Orpea, Ballesol or Vitalia Home are names that stand out in the industry of geriatrics and dependence in Spain, an industry that has thrived over the past years and attracted foreign investment groups.

 Housing is financialized not socialized

Housing is targeted by vulture funds

Despite all this, the EU has decided to support the various financial actors (banks, investment funds, pension funds, vulture funds) who take advantage of a favorable context and choose European housing as the primary target for their investments. As a result, the number of large companies with a great deal of housing has increased considerably. To mention just two, Cerberus, a New York vulture fund, bought 65,000 housing units from GWS (a Berlin-based real estate company that was sold in 2005); in Spain, the investments of the Blackstone vulture fund, which parades as the largest real estate private equity Private equity Private equity or investment capital designates a specific form of institutional investment in private companies with the goal of financing their development, transformation and expansion. The most common forms of private equity are venture capital, which refers to investments in the creation and development of innovative start-ups, and Leveraged Buy-Outs. firm in the world, are estimated at several hundred billion euros in less than four years, between 2013 and 2017. Such funds behave as purely speculative agents, since they do not add any value to their real estate transactions; they do not even pay taxes in the countries where they operate, as they are part of a network of speculative companies. We know that none of this would be possible without the EU’s consent. Over the past years, the European institutions have shown real determination to promote the financialization of housing. In February 2019, the Eurogroup threatened Greece with non-payment of interest on its debt held by the ECB ECB
European Central Bank
The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.
(see Chapter 2.a.) in exchange for a severe reform of the so-called “Katseli” law, which was supposed to protect vulnerable people who are heavily indebted (due to the effects of the austerity measures imposed by Greece’s creditors) and prevent them from losing their main residence. It was only after the adoption of a reform of this law, and the destruction of the housing rights of the Greek population, that the EU stopped its blackmail.

By promoting the repurchase of non performing mortgages by hedge funds and the deregulation of both rental markets and speculative investment in housing, the EU has increased rather than reduced the amount of substandard housing, while of course the opposite should be happening.

An increase in substandard housing in Europe

General observations of the housing situation in Europe can be summed up in three headings: a trend towards privatization of public housing, purchase of large shares of the housing market by only a few transnational financial actors and growing deregulation of the rental and purchasing market. The consequences at the European level are very serious: the financial contribution of householders to pay for their homes has become outrageous (over 40% of their income), dozens of millions of people live in crowded quarters, millions have no place to live at all, over 7 million households are in arrears with rent or mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral.
payments and between 17 and 31 million people live in unsanitary conditions (they cannot properly heat their lodgings, mainly because of damp and pollution). [8]

The other side of the coin is the huge profits for financial investors. The primacy of laws in favor of “free competition” in the housing sector results in reducing the offer of public housing to in ‘innocuous’ level for the expansion of financial capital. Rent bubbles that multiply in more and more European cities are a direct consequence of a liberalized housing market. On the other hand, banks benefit from the multiplication of mortgages, which is also a major consequence of the situation. Indeed, the disengagement of States and the impetus given by European institutions have forced householders to contract debts in order to have access to decent housing. Banks come into the financialization game through mortgage loans and their securitization. They have been working hand in hand with vulture funds since the beginning of the crisis and the European institutions have made sure that their collaboration is as profitable as possible. A great deal of non performing loans held by banks are sold to vulture funds at cut prices. Finally, the ECB actively encourages these sales and acts as a guarantor of a financial capitalist system that ignores human rights for the sake of the accumulation of profit by the ruling classes (see Chapter 2.a.). On the other hand, the leeway left to actors not involved in the race for profit in the housing sector is constantly under threat from public authorities and the EU.

Illegitimate private debt

Greek, Spanish, Cypriot, Irish and Portuguese households have borne the brunt of the housing crisis. Close to a million households have been evicted from their lodgings (over 600,000 in Spain only since 2008) or have been threatened with eviction because they are unable to repay odious bank loans. They are deemed odious because the terms of the contracts were often abusive, as attested by several law suits won by heavily indebted households;also because banks chose to ignore householders’ real capacity to repay; and finally, because as private companies they sought maximum profits without taking responsibility for their abusive practices but had the governments bail them out through illegitimate recapitalization procedures.

Millions of households thus found themselves unable to pay their debts or even meet their most basic needs. Fundamental rights to food, education and health have been constantly breached by fiscal cuts enforced by austerity measures. Households are having to spend more because of public authorities’ failure to supply proper services and cannot repay their own debts. Yet they continue to pay their taxes and thus provide money for the defaulting bank system.

We must also remember that laws enforcing rigorous control of public debt also play a part in the housing crisis. Indeed the public sector has had to withdraw from the housing market since it could no longer invest in social housing.

 Other economic sectors hit by vulture funds

The nefarious activity of vulture funds also hits other sectors beyond health care and housing. The funds are active in most sectors of the economy. The subway in Andalusia, to mention only one instance, depends on investments by Globalvia, a company owned by OPTrust (Canada), PGGM (the Netherlands) and USS (UK).

Large supermarkets such as Carrefour or Alcampo have started selling their non performing loans to vulture funds, among which funds they are also active in the construction sector such as Lindorff, Axactor, Cabot, Link Financial or Cerberus.

The telecommunications sector is also impacted.

 Alternatives and demands

  1. In accordance with the European Parliament Resolution of 28 March 2018 on “improving the debt sustainability of developing countries”, we call on the European Union to adopt European legislation to counter vulture funds along the lines of the Belgian law of 2015. Member States must also take the initiative in adopting such legislation.
  2. The extremely harmful speculative activity of vulture funds is not limited to public debt but also extends to the much larger market of private debt. Laws similar to the one protecting States from vulture funds must therefore be adopted throughout Europe to protect individuals and SMEs.
  3. The public must be informed of the huge damage vulture funds can inflict upon our lives.
  4. In the realm of basic (public or private) services such as housing, health care or care for the elderly, we demand that measures be taken to prevent hedge funds from stepping into those sectors and to promote a form of management designed to meet the needs of citizens.
  5. The common good must always come before paying debts (contrary to current national and European practices).
  6. Tax havens must be prevented (see Chapter 3)
  7. We support the call of members of the network ‘Socialize housing in Europe’ with the following demands :
    • the enforcement of the international right to housing as a basic duty for all EU institutions, Member States, and companies and its implementation as a European housing strategy;
    • the guarantee of democratic housing for large segments of the population supported by the government outside EU competition rules and capital flows;
    • the adoption of a European framework to encourage and support a strict social regulation of private landlords, of rents, estate markets, mortgages, transparency, commodity services and of consequences of mortgage defaulting;
    • protection, encouragement and support for the involvement and organization of tenants and other residents upholding their rights and the necessary structural changes in the field of property ownership and housing.
For further information

Vulture Funds - Publications :


Illegimate private debts



[1Financial corporations’ debt between 2000 and 2007: rise from 232% to 309% of GDP over the Eurozone as a whole. Source: Toussaint E., Bankocracy, London, Resistance Books, 2015

[2Household debt between 2000 and 2007: rise from 49% to 54% of GDP over the Eurozone as a whole. Source : Ibid

[3Debt of non-financial corporations between 2000 and 2007: rise from 76% to 87% of GDP over the Eurozone as a whole. Source : Ibid

[4Gross government debt (on average) between 2000 and 2007: decline from 68% to 66% of GDP over the Eurozone as a whole. Source: Ibid.

[5From 2007 to 2011 household debts increased from 54 to 61%, and the debt of non-financial companies from 87 to 96%, which is a very limited difference compared with the increase in public debts. Source: Ibid.

[6Before 2006, Capio was one of the biggest health care private companies in Sweden and in Europe.
In 2006, Capio was bought by Opica, owned jointly by Apax Partners Worldwide LLP, Nordic Capital Fund VI and funds either counselled or managed by Apax Partners PLC.
Apax Partners PLC is a venture capital company located in the UK, it was founded in 1972 and operates in Hong Kong, China, India, the US, Europe (including the UK) and in Israel.
Since November 2018, Ramsay Générale de Santé (Ramsay GdS) owns Capio and the new corporation is one of the main suppliers of health services in Europe.

[7Fresenius Helios is a German company located in Bad Homburg and dedicated to health care. It is one of the most significant in Germany.
In September 2016, they bought the Spanish hospital group Quirón Salud for €5,760 million, thus becoming the largest private European health group with over 150 hospitals.

[8See The Financial Times, Rising burden of housing costs shown by 60-year UK spending survey,, 18 January 2018 accessed 1.12.2019.
Also OECD Report, HC1.2. HOUSING COSTS OVER INCOME - accessed 1.12.2019, and OECD Affordable Housing Database –

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