Banco Popular: An “unpopular” resolution
If you have minimally followed the news in the last few days, you’ll be aware of the purchase of the Banco Popular by Banco Santander at the symbolic price of one euro.
The reasons are clear: the Banco Popular was on the verge of bankruptcy after losing in the stock exchange more than 50% of its value the past few days and suffer a worrying shortage of liquidity.
The origin of this situation lies in the large number of toxic real estate assets that the bank had in its balance sheet. These assets made the bank incur a loss of 3,500 million euros in the year 2016.
Thus, the purchase of the Banco Popular decision has been taken only a week after it’s crash in the stock market. This operation involves two important aspects:
- The first one is that it is the first operation resulting from the decision of the ‘Single Resolution Mechanism‘.
- The second one and more controversial: The minority shareholders of Banco Popular have lost everything.
What’s the Single Resolution Mechanism?
The Single Resolution Mechanism (SRM) was designed to give the EU a common approach to the banks in bankruptcy and to increase the stability of the financial sector. Its aim is to prevent that the national resolution of a bank has an disproportionated impact to the real economy. Therefore, it pursues that the resolution has a minimal cost to the taxpayers of the country.
The resolution of the Banco Popular has been the first time that this mechanism has entered into action. This decision seeks the protection of depositors and to avoid a bailout that taxpayers end up paying.
In short, is a bank rescue carried out by Santander. This will absorb the entity without State aid or public money.
The Popular shareholders have lost everything
One of the most controversial consequences of the adopted resolution is the loss to shareholders and bondholders of the Popular 100% of their investment, as a result thisinto a real tragedy for those who had invested their savings in shares or other instruments of the Bank’s capital. All the money invested is worthless.
The reason: the Board of Unique Solution has transferred all the capital of the Popular to Banco Santander, reducing the participation of shareholders to 0 euros.
Can I claim my economic lost?
If you are an investor who suffered the bail-in, there is still some hope for you. You can claim your economic lost.
First of all there is a deadline to appeal the European Resolution. However, such a claim is unlikely to succeed.
It is advisable to make a claim for compensation for the damages caused through the civil courts. Banco Popular will have to face this, as it continues to exist in legal form. Similarly, Banco Santander as the new owner must respond to the problems that emerge as a result of the management of Banco Popular previous managers.
The claim period starts from the date of the bail-in. In other words, since the moment Santander made the purchase. It lasts between 3 and 5 years. So you better start considering your legal options.
How?
With legalbono, you can hire the standard plan and access to our network of lawyers. This network is composed of carefully selected professionals. You also will obtain 33% discount in their regular fees which are completely transparent.
Our lawyers can help you to get your money back!
