The Provincial Court of Madrid upholds Banco Santander's obligation to compensate two clients who invested €900,000 in a product linked to BBVA and Telefónica.
The Provincial Court of Madrid has partially confirmed the ruling against Banco Santander for the marketing of a financial product involving €900,000 in investment, according to eldigitaldealbacete.com. The ruling partially accepts the bank's appeal and modifies a significant aspect of the initial sentence.
The transaction was formalised on June 9, 2008 at a branch in Fuenlabrada, with Banco Popular, which was later integrated into Santander. The product, called “Cesta Autocancelable”, had a duration of five years and its outcome depended on the stock market performance of BBVA and Telefónica.
The initial remuneration was 17% of the invested capital, resulting in a payment of €153,000 on June 16, 2008. The contract set observation dates in June 2010, 2011, 2012, and 2013.
The maturity did not guarantee the full return of the capital. If the worst-performing stock was equal to or below 65% of its initial price, the clients would receive shares of that company instead of cash.
In June 2013, BBVA's shares fell below that threshold and were the worst performers. The clients received 70,275 shares of BBVA, valued at €449,995.42 at that time. The affected parties sold part of those shares in May 2018.
The two clients claimed a lack of information about the product and its risks, and their claim succeeded in the first instance. Banco Santander appealed, arguing that the affected parties had investment experience from previous operations with stocks and funds.
The Provincial Court of Madrid rejects that argument. The judges note that both were retail clients, with enhanced information and protection obligations for the entity, and that buying shares or having funds does not, by itself, demonstrate sufficient knowledge about a product of this nature.
The ruling highlights that Banco Popular did not conduct the suitability and appropriateness tests required for this type of product for either of the two clients.
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