Spanish banks start process to give floor clauses money back

Some Spanish lenders started on Friday the process to give clients their money back regarding "abusive" mortgage floor clauses.

Last month, Spain passed a decree to help mortgage buyers get their money back from commercial banks over the floor clauses.

The decree followed a ruling of the European Court of Justice in December of 2016, which ordered Spanish banks to hand back their clients all the money they made on "unfair" mortgage floor clauses.

The mortgage floor clauses impose a minimum interest rate on floating-rate mortgages by establishing a limit on how far mortgage rates could fall in accordance with the benchmark rate.

In reality, however, Spanish mortgage buyers did not profit fully from the record-low interest rate environment in recent years under the floor clauses.

Spanish banks such as Bankia and Caixabank said they have designed an express process to deal with the complaints emerged from the ruling of the European Court of Justice.

Spain's fourth largest lender, Bankia, Friday started the process to give back money to more than 60,000 clients.

The process, which is free, consists of clients fulfilling an application to ask for a revision of the contract.

Bankia removed floor clauses from mortgage contracts in 2015 and the aim of this measure is to help make the process easier through a "fast, simple and transparent" process.

Meanwhile, 130 professionals will study the clients' complaints on floor clauses at Caixabank, which will take a decision if those complaints fulfill the criteria of no transparency when mortgage contract was signed.

The Bank of Spain, the central bank, had predicted that the European Court of Justice ruling would have an impact of 4 billion euros (4.3 billion U.S. dollars) on Spanish commercial banks. Endit