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Senior EU judge favors Spanish banks in mortgage floor case

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Senior EU judge favors Spanish banks in mortgage floor case

A top European court has advised against forcing Spanishbanks to return to customers the billions of euros they paid for extra intereston home loans before a 2013 court decision, Bloomberg News reported the sameday.

Spain's Supreme Court in 2013 issued a ruling the use of minimuminterest rate clauses in residential mortgage contracts. A court in Madrid inApril already ordered approximately 40 banks, including , , and Banco deSabadell SA, to refund the extra interest paid on mortgages sincethe 2013 ruling.

EU Court of Justice Advocate General Paolo Mengozzi on July13 issued a nonbinding opinion to say Spain can apply a time limit because of"macroeconomic issues associated with the scale" of the unfairmortgage terms. Spanish banks would avoid having to make retroactive refunds tocustomers if the EU court were to follow Mengozzi's advice; it has followedsuch advice in most cases, according to Bloomberg.

Data from Morgan Stanley showed that Spanish banks generateda total of €1.1 billion from mortgage floors since the Spanish ruling in 2013and a combined €7 billion since 2008, the FinancialTimes also reported July 13.