Bank profits at risk from rising mortgage claims

Bank of Spain HQ, Madrid

The Bank of Spain warns in its latest financial stability report that legal action against Banks for abusive mortgage clauses is another risk factor.

Rising legal costs related to abusive mortgage clauses, coupled with negative interest rates, are eroding bank profits, points out the Spanish banking regulator.

Spanish banks are facing a tsunami of claims against them for abusive mortgage interest rate floor clauses and not paying their share of mortgage setup costs.

Spanish banks set aside €1.9 billion in 2016 to meet the extra legal costs and payouts they will have to make, but it might not be nearly enough.

With claims mounting, and courts ruling against banks on an increasing number of fronts, the final bill could be billions of Euros higher.

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