The expected pronouncement of the general lawyer of the Court of Justice of the European Union on mortgages linked to IRPH did not leave anyone indifferent yesterday. Moreover, banks and consumer associations agreed to highlight their "optimism" in the face of the legal interpretation made by the Polish Maciej Szpunar , although their interests are diametrically opposed. The former seek to legally annul a legal risk of up to 44,000 million euros in compensation, while the latter trust that the judges order the bank to return the excess interest charged to families and companies whose credits were linked to this index and not to the Euribor , before it sank to its current level (-0.38%).
The report of the EU attorney general considers that the fact that IRPH is considered an official index supervised by the Bank of Spain does not exclude that its commercialization is carried out without transparency. In this way, the lawyer considers that national judges must analyze on a case-by-case basis whether the commercialization was carried out in an abusive manner, that is, without clear information criteria that would allow the consumer to choose other alternatives.
The ruling is not binding and it will be the Court of the EU that gives judgment at the end of this year or beginning of 2020, although in most of the cases analyzed the judges choose to follow the criteria of their lawyers.
The thesis defended yesterday raises even more uncertainty about the financial sector by opening the door to a cascade of claims for abusive commercialization of IRPH. The judges would have to study each of the claims in this way and it is quite likely that some of them will prosper until they reach the Supreme Court again, which already ruled in 2017 on this matter and considered that it could not be analyzed if the clause It was abusive because it was a legal index supervised by the Bank of Spain and published by the BOE. In this case, the key issue would revolve around its commercialization, although in the specific case analyzed by Luxembourg -referred to a Bankia mortgage- the lawyer considered that the sale was correct. "In this, the banks weren't very creative, the marketing was done in a similar way by all the entities," explains a lawyer from one of the main groups.
Waiting for Luxembourg to pronounce itself, the truth is that the financial sector has been gradually reducing its exposure to the IRPH crisis in an attempt to reduce its legal risks and the impact they can have on its balance sheet. The movements have coincided with the warnings of the Bank of Spain itself, which last May warned the sector that "high litigation" is one of the main threats to its business.
Only so far this year, the Spanish financial sector as a whole has reduced the number of mortgages linked to IRPH by around 10%. Reports published by analysts at the end of 2018 raised the loan portfolio linked to this index above 18,000 million, while the latest figures sent by the banks to the National Securities Market Commission (CNMV) put it at 16,200. That is, 1.8 billion less.
In some entities, the reduction is linked to the natural amortization of mortgages, granted for the most part between 2005 and 2010. However, other groups such as Sabadell have opened specific commercial campaigns to offer their customers the change to Euribor in an attempt to suspend future legal proceedings. The entity chaired by Josep Oliú has been one of the most that has reduced its exposure with a cut of 400 million in recent months, equivalent to one third of the credits. In general, the entities have renegotiated the clause "in particular cases and more by commercial criteria than legal", explain different sources of the sector.
Goldman Sachs threw more firewood yesterday and anticipated that if the court's ruling goes in line with the lawyer's conclusions, the entities would be forced to make "high legal provisions" for reasons of prudence and in anticipation of a potential increase in the litigation. However, the firm clarifies that it is impossible to know today the impact of this crisis by not knowing if there would be retroactivity and if the hypothetical compensation would be equivalent to the annulment of the mortgage index or its replacement by others such as the Euribor.
The uncertainty arising from the conclusions of the Luxembourg attorney general also moved to the stock exchanges. The publication of its conclusions led initially to a collapse of the financial sector as a whole that penalized Bankia, CaixaBank and Sabadell, the most exposed entities to the national market. However, as the day progressed the financial groups were recovering their value until closing in green numbers. The banks turned yesterday all their efforts to transfer to analysts and investors that the general thesis defended in the pronouncement is beneficial for them when returning the matter at the hands of the Spanish judicial authorities, where the doctrine of the Supreme endorses the IRPH. Not only the judges, but also the Government and Bank of Spain have submitted reports to the court in which they defend the index and warn of the high risks for the financial sector of facing compensation of up to 44,000 million
«It is up to the national judge, when checking the transparency of the contested clause to verify, taking into account the set of circumstances surrounding the conclusion of the contract, on the one hand, if the contract transparently exposes the method of calculating the type of interest, so that the consumer was able to assess, based on precise and intelligible criteria, the consequences and obligations of information provided for in national regulations. ”concludes Spuznar.
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- Mortgages
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