MADRID, Feb. 3 (Xinhua) -- Spanish lender Banco Popular on Friday reported 3.5 billion euros (3.77 billion U.S. dollar) of losses in 2016, as opposed to the 105 million euros of profits earned in 2015.
According to the bank, the results were lower than expected, as it took heavy impairments for its large portfolio of toxic loan.
The bank said it set aside 4.2 billion euros of provisions against bad debts.
In addition, the bank's restructuring process had an impact of 370 million euros. It also set aside 229 million euros to deal with the impact of floor causes, while the fiscal reform had an impact of 47 million euros.
Banco Popular chairman Angel Ron, who is leaving his position, said the bank will pay clients back the money from mortgage clauses after analyzing each case.
However, he warned that this decision could put the stability of the financial system at risk.
"The current situation makes us face a situation of uncertainty as a sector. We should let justice run its course, but we hope it is fair with all of us, with the financial sector as well," he said.
Last month, Spain passed a decree to help mortgage buyers get their money back from commercial banks regarding "abusive" mortgage floor clauses.
The decree followed a ruling of the European Court of Justice in December of 2016, which ordered Spanish banks to hand back their clients all the money they made on "unfair" mortgage floor clauses.
The mortgage floor clauses impose a minimum interest rate on floating-rate mortgages by establishing a limit on how far mortgage rates could fall in accordance with the benchmark rate.
In reality, however, Spanish mortgage buyers did not profit fully from the record-low interest rate environment in recent years under the floor clauses.
Banco Popular share prices have fallen more than 90 percent over the past five years.
