HE General Court of the European Union (TGUE) – in the first instance court of the CJEU – confirmed this Wednesday:Creditors and shareholders who suffered losses due to the decision Popular Bank They have no right to compensation in 2017 This amount will be billed to the Single Resolution Fund (SRF) as it will not be more than the amount resulting from the decision.
The Luxembourg court, in several decisions that are still being appealed before the Court of Justice of the EU (CJEU) within a period of two months and 10 days, Single Decision Board (JUR), Concluded in 2020 those affected do not have these rights Accordingly, they would have to be compensated because they would not have been better off if a liquidation had been carried out as usual for the organization (resulting in the sale of the organization to Santander for one euro) rather than pursuing the remedy. declaration made by the court.
It is anticipated that shareholders and subordinated debt holders will subsequently incur losses. 11.4 billion euroswith the implementation of European banking rules adopted after the financial crisis precisely to avoid the public bailouts that began with the popular case.
european mechanism
The European Union, within the framework of the banking union, after the 2008 global financial crisis, Single Resolution Mechanism (MUR), whose main purpose is to allow a regular resolution The situation of banks that are in serious trouble without using taxpayers’ money and at the same time maintaining financial stability. Therefore, if a bank is or is likely to be in serious difficulty, Single Resolution Board The JUR, a body of the Union, may, under certain conditions, adopt a resolution mechanism, which must be approved by the European Commission.
HE Single Solution Fund (FUR) is also part of the Banking Union. This is about a emergency fund It is a loan that can be used in times of crisis and is financed by the banking sector itself.
Inside June 2017, The SRB adopted a resolution instrument in respect of the Spanish bank Banco Popular, approved by the Commission, which led to the acquisition of Banco Popular shares by the Spanish bank at a price of one euro. Santander Bank.
According to this Union Regulation Regarding the resolution of credit institutions, if proven, shareholders or creditors An organization that is the subject of a resolution measure has suffered more losses than it would have suffered in the event of liquidation of the organization in question, in accordance with the above-mentioned provisions. ordinary bankruptcy procedure, SRB may use FUR to pay compensation.
popular case
In the case of Banco Popular, to estimate this possible difference in treatment, an independent appraiser estimated the impact of a hypothetical liquidation scenario, and affected shareholders and creditors had the opportunity to present their claims on the matter. The SRB subsequently ruled that in the event of the liquidation of Banco Popular, the affected shareholders and creditors could not receive better treatment than that resulting from the decision and that they were not entitled to compensation from the SRF.
However, some affected shareholders and creditors They appealed this decision in the General Court. this Wednesday ruled for the first time on its legality and rejected all objections.
Sentences
The court rejects the allegations They questioned independence It is thought that consultancy firm Deloitte, which carried out the valuation of the bank, relied on the violation of the right to be heard of those affected. Appraiser relied on correct methodology and I didn’t spend any money open errors In evaluating the assets of Banco Popular.
“The outcome of an ordinary bankruptcy procedure will therefore be the same as the outcome of the decision; therefore “The property rights of affected shareholders and creditors were not violated.”The European court said this in a statement this Wednesday.
Banco Popular’s decision was the subject of dozens of appeals before Spanish and local courts. European Justice had confirmed the legality of the operation in many previous decisions.