Spain banks hit by EU court ruling on unfair mortgage rates

Markets Associated Press

Spanish banks face the prospect of having to pay back several billion dollars to clients following a European Court of Justice ruling over clauses in their mortgage agreements.

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The decision Wednesday overruled one by a Spanish court in 2013 that annulled so-called ground clauses but exempted banks from repaying money made on the contracts up to that year.

The clauses set a minimum interest rate, meaning customers could not benefit when official rates dropped beneath that level. They started around 2009 as the financial crisis struck.

The European Court said a capping date for reimbursements was incompatible with EU law.

Spain's International Financial Analysts group estimated banks may have to pay 4.5 billion euros ($4.7 billion).

Shares in several major banks fell on the Madrid stock exchange following the announcement.