The consequences for clients of the Libor rate substitution can be very damaging. Asufin has reported to the Bank of Spain and the National Securities Market Commission (CNMV) that the entities that have in their portfolio multi-currency mortgages are not informing their customers about the consequences of probable disappearance of Libor on December 31, 2021, which could open a new front in bank litigation, according to Europa Press.
The CNMV recommended on January 13 to the entities exposed to Libor to adopt measures to manage the transition appropriately, But Asufin is aware that none of them has sent a statement to their clients to inform them of the disappearance of Líbor and, where appropriate, of the benchmark rate that would be applied to your mortgage as an alternative. According to Asufin, a new judicial front could be opened for 70,000 families, because “most of the deeds contain endorsement clauses that could be abusive.”
The association has drawn attention to the case of Kutxabank, which establishes as a substitute the IRPH Entities index, while Barclays (which inherits CaixaBank) and Caja Segovia (which inherits Bankia) establish that they will proceed to apply the early expiration clause in the event of not reaching an agreement or due to the impossibility of establishing an alternative index (in the cases of Bankia and BBVA).
In the case of entities within the Banco Popular group (now Santander) no proxy index is foreseenTherefore, the one designated by the European Commission, according to the CNMV, would apply, while Banco Sabadell refers to an index that is determined by law or regulatory or administrative provision. CaixaBank points out that will be the index with the greatest possible analogye, while Bankinter, Banco de Valencia, Bankia or Ibercaja refer to an alternative index that the bank can obtain in the market for day-to-day or similar terms.
On their side, the deeds of Banco Santander and Deutsche Bank establish an alternative index that will be determined by one or more London banks. Other entities have established a fixed rate that would be established by the last published value, as in the case of Catalunya Caixa, Caja España and Caja Segovia, and Barclays proposes a period to negotiate with the client, through bilateral agreement.
Asufin does not see “plausible” that clients are willing to have their mortgages contain an IRPH index or that they refer to a new index that the bank sets unilaterally and that is more damaging for them, he said. For this reason, the association has demanded that the CNMV and the Bank of Spain “oblige” entities to report your exposure to risk in this type of mortgages, detailing the number they have outstanding in their portfolio, their total amount, the actions they are carrying out to guarantee a transition that is respectful of consumer rights and the information they are giving their customers and through which channels.
The Libor administrator is conducting a public consultation on its intention to cease publication of the index beyond the end of 2021 on all available maturities in the euro, Swiss franc, Japanese yen and British pound, as well as the maturities one week and two months corresponding to the US dollar. The remaining maturities in this last currency, they would stop publishing as of June 30, 2023.
Likewise, the competent authorities of the United Kingdom and the United States will cease in the publication of Libor from these dates, urging entities to stop entering into new contracts that use the index as soon as possible and, in any case, before December 31, 2021.
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