The Single Resolution Board (SRB) has decided that no compensation is due to shareholders and creditors affected by the resolution of Banco Popular Español, S.A. (BPE). It concluded that they would not have been better off under normal insolvency proceedings. The decision is based on the post-resolution valuation by an independent valuer, as well as on the analysis of comments received in the context of the ‘right to be heard’ process. The decision has been published today on the SRB's website, while a summary of the decision will also be published in the Official Journal of the European Union.
“This decision now closes the process of analysing whether insolvency would have meant a better outcome for affected shareholders and creditors of BPE,” said SRB Chair, Elke König. “It is clear that this is not the case. 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.”
BPE was resolved on 7 June 2017, following the European Central Bank's (ECB) assessment that it was failing or likely to fail. The SRB decided that resolution was in the public interest in order to protect depositors and prevent instability in the financial system and the Spanish national resolution authority (FROB) implemented the decision at a national level. The bank was sold to Banco Santander, S.A.. The services provided by BPE to its customers continued as normal after resolution.
A main principle of the European resolution framework is that no creditor should receive worse treatment than if the resolved bank was wound up under normal insolvency proceedings on the resolution date. An independent valuer analysed hypothetical insolvency scenarios in the so-called Valuation 3 report. It found that they would not have been better off if the bank had gone into insolvency proceedings on the same date.
On 6 August 2018, the SRB published a preliminary decision that no compensation was required and opened a ‘right to be heard' process allowing affected shareholders and creditors to express their views and provide reasoning as to why they may not agree with the preliminary decision and its underlying reasoning.
The SRB reviewed 2,856 submissions from parties who registered and were verified to take part in the process. The independent valuer was also asked to provide its independent views on the comments related to the Valuation 3 report. As outlined in the decision, the comments included in these submissions covered a number of aspects, including the independence of the valuer and the content of the Valuation 3 report.
Following this analysis, the SRB adopted its final decision, which was addressed to FROB, as the national resolution authority that implemented the resolution decision. This final decision is the last step in the formal process following the resolution of BPE.
Find out more about the Banco Popular resolution on our dedicated webpage.
SRB Final Decision and Annexes in English – Authentic Version:
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