* Customers received insufficient information - government
* Santander appeals against fine
(Adds detail of other misselling and context)
By Jesús Aguado
MADRID, Feb 17 Santander, the euro
zone's largest bank by market value, was fined 16.9 million
euros ($23.2 million) by Spain's market regulator for misselling
convertible bonds to customers.
The Spanish bank committed two serious infractions in not
providing clients enough information about an instrument that
raised 7 billion euros in two weeks, the government said in its
official bulletin on Monday.
The stock exchange regulator, the CNMV, levied two fines
against the bank as a result.
Santander said on Monday it was appealing against the fine.
It said the CNMV had approved the bond when it was introduced in
2007 and the ruling did not affect its legal validity.
The CNMV declined to comment.
Spain's banking system is heavily structured around local
branches where customers have a named bank manager, a
relationship that makes it easier for account managers to sell
their customers financial products from health insurance to
Since the global financial crisis, customers have
increasingly claimed banks missold them financial products.
Spain's state rescue fund FROB has estimated that banks have
paid out 1.55 billion euros in arbitration agreements over
Santander's customers have initiated 50 court cases in
relation to the bond that the bank called Santander Valores, but
the courts have only decided in favour of the customers in two
of them, a source with knowledge of the situation said.
The convertible bond was paying a 4.8 percent fixed return
until it was converted into shares of Santander in 2012, when
the bank's share price was near historical lows.
The government bulletin also said Jaime Botin, the former
head of Spanish small-cap bank Bankinter and brother of
Santander Chairman Emilio Botin, received a 500,000 euro fine
from the CNMV for not declaring a significant stake in
Bankinter. The bulletin did not give any further details.
Ramon y Cajal, a Spanish law firm that has previously
represented Jaime Botin, was not immediately available to
($1 = 0.7307 euros)
(Additional reporting by Tracy Rucinski; Writing by Sarah
Morris; Editing by Erica Billingham)