A Spanish court has admitted a class-action suit against Banco de Sabadell SA and Banco Popular Español SA over the sale of mortgage insurance, lawyers representing the plaintiffs said.

In a statement, Espacio Legal said it was representing a case brought by the Association of Insurance Mediators of the Principality of Asturias, located in northern Spain, and alleges that the banks used abusive practices in granting mortgages.

The plaintiffs allege that borrowers were obliged to take out life insurance with a single premium with the bank's own insurance businesses as a prerequisite to obtaining a mortgage.

Spanish banks have been subject to many legal actions over caps on interest rates on floating-rate mortgages, requiring lenders to provision for billions of euros.