Press Release

DBRS Morningstar: ECJ Decision on Spanish Mortgages Positive for Banks

Banking Organizations
March 03, 2020

This commentary focuses on the ECJ’s ruling on IRPH indexed mortgages, alongside the potential impacts for the Spanish banking sector.

Key highlights from DBRS Morningstar’s commentary “ECJ Decision on Spanish Mortgages Positive for Banks” include:

• The ECJ ruling removes uncertainty and is positive for the Spanish banks.
• The ruling sets a new bar for compliance with the transparency requirement on the sale of IRPH mortgages.
• DBRS Morningstar understands most of the mortgages sold by Spanish banks fulfill this requirement
• The potential impact of the ruling for Spanish banks should be fairly limited, in line with our baseline scenario.

“This ruling removes uncertainty from the sector and DBRS Morningstar views the decision as positive for the Spanish Banks. An adverse ruling for banks could have left the door open for higher charges for Spanish banks as the total amount of IRPH mortgages is very significant.” said Pablo Manzano from DBRS Morningstar’s Financial Institutions team.

The full commentary “ECJ Decision on Spanish Mortgages Positive for Banks” is available at www.dbrsmorningstar.com.