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Ibercaja Banco raises provisions for mortgage floor claims to €50M

Ibercaja Banco SA intends to set aside additional provisions to cover the costs of potential compensation relating to interest rate floors on previously sold mortgage contracts, joining the ranks of CaixaBank SA and Banco Popular Español SA, which have already raised provisions for the issue by hundreds of millions of euros.

Ibercaja Banco had already provisioned up to €30.1 million to address the legal risks arising from the elimination of interest rate floors on mortgage contracts that were sold since May 9, 2013. But after the European Court of Justice ruled that Spanish banks must reimburse affected customers what they lost over the entirety of their contracts and the Spanish government imposed a three-month period for settlements with clients, Ibercaja said it would propose to its board an additional gross provision of €19.9 million, to be reflected in its full-year 2016 results.

Separately, Unicaja Banco SA said it could take a hit of €130 million to its full-year 2016 accounts from the EU court's mortgage floor ruling. Grupo Cooperativo Cajamar, meanwhile, said it has already provisioned €200 million but expects the final amount to be much lower.