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Spanish banks' shares tumble after Supreme Court rules on mortgage taxes

Shares in Spanish banks tumbled Oct. 18 after Spain's Supreme Court ruled that the onus of paying taxes related to the registration of mortgage deeds should fall on banks and not on clients, the Financial Times reported Oct. 18.

Banco de Sabadell SA closed 6.70% lower on Oct. 18, while shares in CaixaBank SA and Bankia SA fell 4.54% and 5.11%, respectively.

The ruling, which altered an earlier court decision, did not mention whether banks would be required to refund customers, but Citigroup analysts estimated potential retroactive payments at between €1.3 billion and €4.5 billion, the FT said. Jefferies analysts, meanwhile, said the cost could be limited to hundreds of millions of euros, depending on the terms that the lenders could work out, according to the report.

Spanish banking associations AEB and CECA said after the ruling that banks have always followed rules and have not collected money from customers for the taxes, Bloomberg News said in a same-day report.