Court Chides Santander for Pulling Preferred Share Case Appeal
The decision by Santander robs the court of an opportunity to lay down legal criteria that would help resolve similar cases in the future, the Madrid-based tribunal said in an e-mailed statement today. The court also said it regretted the time lost by its staff in preparing for the hearing.
Sales of preferred shares to their own customers by banks anxious to shore up capital ratios became a scandal in Spain as clients said they weren’t made aware of the risks of holding the junior debt. Customers with preferred shares in nationalized banks such as Bankia have been left facing losses under the burden-sharing terms imposed by Europe as part of its bailout for Spain’s banking system last year.
In 2011, Santander lost an appeal over a decision by a court in Mallorca to nullify the sale of preferred shares to two clients who had invested about 225,000 euros ($294,640) in the securities. Santander’s decision to abandon the appeal means the original ruling stands, the tribunal said.
A spokesman for Santander, who asked not to be identified by name, said the bank didn’t have any immediate comment.
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