The Single Resolution Board (SRB), the European agency responsible for resolving major banks in the euro area, put the final touches in places to the saga of the Banco Popular bank rescue on Wednesday 18 March. After almost 3 years, it decided not to compensate former shareholders and creditors of the Spanish bank, being of the opinion that normal insolvency proceedings would have been more costly.
The decision to resolve the sale of the bank on 7 June 2017 (see EUROPE 11803/9) has been the subject of numerous complaints coming before the European Court of Justice by investors who feel they have been adversely affected by the bank's resolution (see EUROPE 11851/17).
Indeed, one of the main principles of the European framework for bank resolution is that no creditor should be treated worse than if the bank were liquidated under normal insolvency proceedings on the date of resolution. This is the ‘no creditor worse off principle' and is exactly what the SRB wanted to verify.
For this purpose, the SRB used an assessment carried out by an independent expert in the shape of the company Deloitte, who analysed several insolvency scenarios and reviewed the 2,856 contributions from injured parties that were considered eligible (see EUROPE 12395/18). Their finding is clear and confirms the preliminary decision from 2018 (see EUROPE 12040/29): the situation would not have been any better if the bank had been subject to insolvency proceedings on the same date.
“I understand this will be disappointing for those who have lost out, however it proves that the resolution framework is effective and shielded the taxpayer from losses and financial instability”, said SRB Chair, Elke König, in a statement.
See the decision: https://bit.ly/33s29Lf (Original version in French by Marion Fontana)