Bankia, Spain's fourth largest bank that was bailed out by the state in 2012, on Monday reported a much steeper drop in net profit for last year than analysts had expected. In a statement, the bank blamed the 22.7 percent net profit drop to 804 million euros partly on "the negative interest rate environment experienced throughout most of the year" and the sale of a subsidiary in Florida.
The bank said it was also forced to make exceptional provisions of 114 million euros ($122 million) for planned settlements to clients who were sold mortgages deemed to have abusive interest rate floors.
Bankia is among several banks that sold mortgages which imposed a limit on how far interest rates could fall, even if real-time rates dropped below that limit.
The European Court of Justice ruled last month that lenders must reimburse customers who were sold these mortgages, prompting the Spanish government to give banks three months to reach settlements.
Bankia, majority-owned by the state, has suffered all year from its sale of City National Bank of Florida (CNB) in October 2015 at a loss of 72 million euros.
Comments
Comments are closed.