Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  News  >  Economy & Forex

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Spanish court clears banks of market abuse in mortgage case

10/21/2020 | 07:49am EST

* Court identifies lack of transparency in IRPH contracts

* Decision is seen as a relief for Spanish banks

* Consumer group accuses court of protecting banks

MADRID, Oct 21 (Reuters) - In a boost for Spain's banks, the Supreme Court said on Wednesday a mortgage pricing index used during the country's property crisis was valid and did not constitute market abuse, although there was a lack of transparency in some contracts.

The long-awaited ruling, similar to the court's first decision in 2017, spares Spanish banks from a worst-case scenario that could have cost them billions in compensation, just as they are struggling with the economic impact of the COVID-19 pandemic and ultra low interest rates.

The ruling followed a European Court of Justice (ECJ) decision to send the dispute back to national courts, opening the way for individual claims.

Hundreds of thousands of home loans were sold in Spain, mainly in 2007 and 2008, based on the IRPH index at interest rates that tended to be higher than interbank benchmark rate Euribor.

The Supreme Court, which will publish the ruling in the coming days, said in statement that in four of the five IRPH cases it analysed there was no abuse, even though failure to report the index's evolution showed a lack of transparency.

It will deliberate on a fifth, slightly different case - related to social housing - later on Wednesday, it said.

Spain's listed banks still hold around 14 billion euros ($16.6 billion) of these mortgages, with Caixabank and Bankia - which are in the process of merging - accounting for around half.

Shares in Bankia rose after the ruling but later pared gains. Caixabank was down 0.4%.

"In principle, the news is positive as you take pressure off the sector. Lenders will have less pressure to return any interest earned from the IRPH contracts to customers," said Nuria Alvarez, analyst at Madrid-based brokerage Renta 4.

Most Spanish banks have not set aside any specific provisions over the case.

Though there are no official figures for how many mortgages were sold using the IRPH, Spanish consumer association Asufin estimates around one million people were affected.

Consumer association 'IRPH Stop Gipuzkoa' said the court was trying to protect banks and added that "bottom line, to no one's surprise, it has not found abuse".

The court had ruled in 2017 that the index did not constitute a market abuse, but customers and lower courts challenged that decision at the ECJ.

Even after March's ECJ decision there have rulings in favour and against customers, prompting the Supreme Court to update guidelines which apply to all lower courts.

($1 = 0.8582 euros) (Reporting by Jesús Aguado; additional reporting by Emma Pinedo, editing by Andrei Khalip and Mark Potter)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BANCO BILBAO VIZCAYA ARGENTARIA, S.A. -0.13% 3.949 Delayed Quote.-20.57%
BANCO DE SABADELL, S.A. -2.70% 0.3389 Delayed Quote.-66.58%
BANCO SANTANDER, S.A. -0.97% 2.4445 Delayed Quote.-31.04%
BANKIA, S.A. -1.53% 1.477 Delayed Quote.-21.21%
BANKINTER, S.A. 0.93% 4.212 Delayed Quote.-36.10%
CAIXABANK, S.A. -1.41% 2.172 Delayed Quote.-21.27%
LIBERBANK, S.A. -2.89% 0.27 Delayed Quote.-17.31%
UNICAJA BANCO, S.A. -2.88% 0.674 Delayed Quote.-28.31%
Latest news "Economy & Forex"
09:21aFederal Reserve Board welcomes and supports release of proposal and supervisory statements that would enable clear end date for U.S. Dollar (USD) LIBOR and would promote the safety and soundness of the financial system
09:21aAgencies issue statement on LIBOR transition
09:21aRetail turnover over 7 percent up in October
09:21aManufacturing output prices almost 5 percent down in October
09:21aTurnover accommodation and food services rebounds sharply in Q3
09:21aANNUAL REPORT YOUTH MONITOR : key indicators 2015-2019
09:16aCentral bank head says China must not monetize deficit - state media
09:15aFed says extension of these programs was approved by u.s. treasury, and will help market planning through the first quarter of 2021 to aid recovery from pandemic
09:15aFed says liquidity facilities are continuing to support market functioning and enhancing credit
09:15aFed says programs are separate from credit facilities that u.s. treasury recently ordered closed on dec. 31
Latest news "Economy & Forex"