Litigation Tail Risk for Spanish Banks: IRPH
DBRS published a new commentary analysing the litigation risks for Spanish Banks regarding the sale of consumer mortgages linked to the IRPH index:• DBRS expects the ECJ to declare the sale of residential mortgages linked to IRPH as transparent, confirming the Spanish Supreme Court ruling in 2017.
• However, an adverse ruling for banks could leave the door open for additional costs for banks.
• DBRS estimates that since 1999 around 7.6% of the total residential mortgages granted in Spain have used the IRPH index.
• If the ruling is adverse for the banks, it is difficult to estimate the actual impact since it depends on a number of variables, but it could be material.
• The final impact would depend on the index used in the remediation process, the time limitation to claim compensation, as well as other factors.
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