Financial institutions are fattening their piggy banks to deal with the legal claims they have coming up related to mortgage lending. On the one hand, due to excessive spending in contracts. On the other hand, because of the floor clauses. This is reflected in its financial reports over the past few months.
Not everyone does it, but the majority do. The latest half-yearly reports published by banks like Caixabank, Santander, Banca March, Abanca, Kutxabank and Ibercaja indicate that they are increasing their provisions to deal with these legal problems related to the granting of loans for the purchase of housing. On the other hand, other entities, such as BBVA or Sabadell, do not provide details of specific savings on this subject, although they reflect increases in provisions for legal matters.
In fact, this disparity is one of the characteristics of this type of financial information, because each entity presents the data and arguments about it differently, with more or less specificity. This prevents us from building a complete, holistic picture that reflects the arrangements the bank has as a whole for dealing with mortgages or what its expectations are for all of these processes.
The two fronts of practices called into question
First of all, the bank has two major legal avenues in mortgage matters. On the one hand, that of abusive spending on mortgage loans signed between 2024 and 2006. In January of this year, the Court of Justice of the European Union (CJEU) concluded that the Spanish legislation which imposes the prescription of claims ( five years to declare and 10 in Catalonia) is contrary to Community law.
On this issue, the judges of the European Court ruled that a deadline could not be set – from the moment the last invoice is paid – if customers were not aware that their contracts contained unfair aspects.
On the other hand, there is the issue of floor clauses, through which banks protected their mortgages from changes in interest rates and which have not been fully resolved for more than a decade. In 2015, the Supreme Court already ruled that entities must return everything they overcharged. And this summer, the CJEU approved class actions against banks for this type of clause.
The figures of each bank
Each bank details the information relating to these provisions for mortgage disputes differently. For example, Ibercaja separates how much he has reserved for each of the fronts and to what extent both have changed. In the case of floor clauses, these provisions have been slightly reduced. As of June 30, it had a cushion of 10 million euros for these disputes, while in December it was 10.4 million euros. On the other hand, for disputes relating to mortgage charges, this provision has practically doubled, exceeding 12 million euros at the end of the first half of 2024, while it was 6.6 million six months earlier.
This entity also begins to evaluate the latest mortgage spending decisions in its latest financial information. She assures, with regard to the latest resolution of the CJEU, that “we cannot presume that a certain contractual clause is unfair, since this qualification may depend on the particular circumstances of the conclusion of each contract and, above all, on specific information that each professional has provided to each consumer.
Other banks point out that mortgage issues are the reason for the increase in their legal provisions, but they do not go into detail. This is the case of Abanca. In six months, its provisions for procedural issues increased from 11.7 to 28.3 million. In the first half report, it states that this figure “essentially includes provisions made by the group to cover other liabilities, certain or conditional, of a specific nature, linked to massive contingencies linked to sectoral mortgages”.
Something similar is happening with Kutxabank, which as of December 31 had reserved 186.5 million euros for this matter and this June 30 this figure has almost doubled, up to 332.29 million. “During the half-year, there were various judgments from the Court of Justice of the European Union and the Supreme Court concerning claims for mortgage costs or floor clauses, which led the Group to strengthen the provisions set up for present and future claims,” he summarizes. . in the financial information which was transmitted to the National Securities Market Commission (CNMV).
More and more entities provide information, even if it is partial. During the same half-year, Caixabank increased provisions for disputes related to mortgage expenses from 73.5 to 79 million euros. And he mentions that, on June 14, the Supreme Court established that “the first day of the limitation period for the action for restitution of mortgage fees unduly paid by a consumer will be the last day of the judgment declaring the nullity of the clause which obligated these payments, except in cases where the lending entity proves that, within the framework of its contractual relations, this particular consumer could have known at an earlier date that this stipulation (cost clause) was abusive.
Santander, for its part, only provides details on the provisions relating to disputes regarding floor clauses, inherited from the takeover of Banco Popular. At the end of the first half, it specifies that “the residual potential loss linked to ongoing legal proceedings is estimated at 53.67 million euros, fully covered by provisions”. In December, for this same reason, it reflected 52.6 million.
Concerning the floor clauses and mortgage charges, Banca March also details an increase in one of the latest documents sent to the CNMV. In his case, he refers to the whole of 2023. He assures that, during this year, “there has been an increase” of just over 2 million euros, compared to the December 31, 2022. Which represents an increase in funds of 130.7%. . “This is mainly due to the establishment of certain litigation funds which represent their best estimate of the possible cash flows that could be produced, without any of them being significant on an individual level.” It concludes that, of the 3.59 million euros of provisions made, 3.2 million correspond to disputes over floor clauses and mortgage charges.
There are other entities which, for legal reasons, give figures on their provisions, but without detailing them, even if they have increased. As of June 30, BBVA had 773 million provisioned for procedural issues and ongoing tax disputes. In December, there were 696 million. He specifies that of these 773 million, 612 correspond to legal contingencies and 160 million euros to tax contingencies.
Sabadell, the bank on which BBVA launched a purchase offer (OPA) last spring, only emphasizes that it has 69.2 million reserved for these issues at the end of the first half. At the end of 2023, this figure rose to 60.5 million euros. The same thing happens with Cajamar, which this year increased its piggy bank for “different legal procedures” from 25.79 to 29.13 million, but does not specify anything else.
At the same time, Bankinter and Unicaja, which also do not provide details, have reduced this provision for prosecution. The first, from 346 to 327 million, during this last half-year. And Unicaja, from 114.2 to 62.7 million euros, according to the figures in its financial information.
