The Provincial Court of Madrid has ruled in favor of a woman who invested 66,737.47 euros in the well-known ‘Santander Securities’, confirming, therefore, the condemnation of Banco Santander for not adequately informing her of the risks involved in contracting a financial investment product that is considered “complex.” In this way, the entity will have to compensate it for the losses suffered after its securities were converted into shares, since the courts consider that the bank did not clearly explain how this savings method really worked.
This is stated in ruling 315/2026, of September 18 (available on the Judiciary website), which has rejected the appeal presented by Banco Santander supporting the defense of the affected party. The Court confirms that the bank did not comply with its duty of information, transparency, diligence and loyalty, and also states that it must bear the legal costs of the first instance, as well as the appeal.
It all started between 2007 and 2008, when the client contracted 14 ‘Valores Santander’ securities for a total amount of 66,737.47 euros. It was an investment product that is not easy to understand, but which had, at least at the beginning, a guaranteed profitability through the collection of interest, which then became mandatory to convert into bank shares. The problem was that the value of those shares could be lower than the money invested, a risk that, according to the ruling, was not fully explained to the client before signing the contracts. This violated the standards necessary to accept a product of such difficulty.
Banco Santander did not correctly explain the risks of the investment
The woman had previously contracted less complex financial products, such as shares and fixed-term deposits, so she did not have experience that would allow it to be assumed that she understood how ‘Valores Santander’ works.
These products were issued in 2007 to finance the acquisition of the Dutch bank ABN Amro. Its operation consisted of clients handing over an amount of money in exchange for securities paid with interest during the first years, although at maturity they did not directly recover their capital, but instead received shares of Banco Santander.
The peculiarity was that the price used to calculate the shares that investors would receive was set with reference to the time of contracting and not to the value they had when the exchange took place.
Therefore, if the share price fell during those years, clients could end up receiving securities whose stock market value was lower than the amount initially invested.
This was precisely the main risk that, according to the Provincial Court, the entity had to explain in an understandable way.
The ruling recalls the doctrine of the Supreme Court, which considers ‘Santander Securities’ a “complex financial product”, since the redemption price is not known in advance, the investor can lose part or all of his money and the result depends on the evolution of another financial asset.
For this reason, entities have the obligation to provide especially careful information to clients who are not investment professionals.
In the case of this woman, the Court considers it proven that a financial advisory relationship existed, since it was the entity itself that intervened in the contracting of the product.
However, Banco Santander failed to demonstrate that it had adequately complied with its obligations.
The magistrates explain that the subscription documents “also do not contain any information about the product”, while the information brochure provided by the entity was not signed by the plaintiff or her husband, so there was no evidence that it had been delivered before the contract.
Furthermore, the court warns that its content was not sufficiently accessible for a person without specialized knowledge, since it explained the characteristics of the product in terms that “are not easy to understand for a person who lacks financial knowledge.”
Added to this is that the bank employee did not properly clarify the operation either.
The ruling insists that it was not enough to tell the client that her securities would be converted into shares or to warn her that these could rise or fall in price.
The really important thing was to explain to him that the number of shares he would receive was calculated from a price prior to the exchange, so he could lose money even before he began to have them.
In this sense, the Chamber points out that “the risks of investment, as the ruling indicates, do not consist of knowing the exchange in shares and that the shares fluctuate”, but in understanding how their value was fixed and what economic consequences the fall in the price could have.
Therefore, it also does not accept the bank’s argument that the woman had previously invested in shares. According to the Court, this experience did not demonstrate that he had sufficient knowledge to understand a product of these characteristics.
The Provincial Court confirms the compensation and forces the bank to pay the costs
The conflict ended up reaching court after the woman complained to Banco Santander for the economic damages derived from the investment.
In November 2023, the Court of First Instance number 6 of Móstoles partially upheld their claim and declared the contractual liability of the banking entity for failing to comply with its information obligations.
Specifically, it considered that the bank had not demonstrated that the client really knew the risks of the product and ordered it to compensate her for the losses suffered.
However, it rejected the main request for contractual termination, understanding that failure to comply with information duties could give rise to compensation for damages, but not to terminate the contract for that reason.
Banco Santander appealed this decision, arguing that it was not appropriate to recognize compensation and that, in any case, it was necessary to take into account all the benefits and returns obtained by the investor.
However, the Provincial Court of Madrid rejects their arguments and recalls that failure to comply with information duties may give rise to contractual liability under article 1101 of the Civil Code, when such failure causes economic damage to the client.
In fact, the ruling expressly states that “the lack of pre-contractual information is fully essential in article 1101 CC.”
Regarding the amount that the affected party must receive, the Court confirms that the compensation must be calculated taking as a reference the 66,737.47 euros invested, but discounting the value that the shares had when the exchange took place and the returns obtained during the validity of the product.
That is, it does not mean that the bank has to fully return the 66,737 euros, but rather compensate her for the real economic loss she suffered when contracting those securities.
To this end, the Chamber applies the doctrine of the Supreme Court and remembers that the compensable loss is determined by “the value of the investment, less the gross returns derived from the Securities before maturity, less the value of the shares at the time of their conversion, in accordance with the trading price at that time.”
Furthermore, the magistrates clarify that the dividends that the woman could have collected after the exchange should not be deducted from the compensation, since, from that moment, the shares became part of her assets and any subsequent benefit or loss depended on her decision to keep or sell them.
In the words of the Court, the returns after the exchange constitute an “exclusive consequence of the decisions taken by the interested party.”
Therefore, only the benefits obtained while the initial investment in ‘Valores Santander’ was in force, as well as the value of the shares at the time of their conversion, should be taken into account.
To the amount resulting from this calculation, the corresponding legal interest must be added from the presentation of the claim.
Finally, the Provincial Court also agrees with the woman regarding legal costs. Although he had initially claimed 70,000 euros, he later clarified that the amount invested actually amounted to 66,737.47 euros, a difference that the magistrates considered a simple material error.
Therefore, they conclude that what they wanted had been completely accepted, thus forcing Banco Santander to pay the costs of the first instance and those corresponding to their own appeal.
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In this way, the Provincial Court of Madrid confirms the bank’s responsibility for the marketing of ‘Santander Securities’ without having correctly informed the client of the risks it assumed. An appeal could be filed against the resolution.