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June 07, 2017

EC approved, under the EU bank recovery and resolution rules, the resolution scheme of Banco Popular Español, S.A. based on a proposed resolution scheme by the Single Resolution Board (SRB). This is the first resolution action taken by SRB under the Bank Recovery and Resolution Directive (BRRD), with EC approval. SRB has transferred all shares and capital instruments of Banco Popular to Banco Santander S.A. This means that Banco Popular will operate under normal business conditions as a solvent and liquid member of the Santander Group. The resolution scheme entered into force on June 07, 2017.

The resolution of Banco Popular Español, S.A. was approved under EU's bank recovery and resolution rules, as agreed in the post-crisis Banking Union framework. This involves the sale of Banco Popular Español, S.A. to Banco Santander, which is a sound financial institution. This was the best course of action to ensure continuity of important functions performed by the bank and to avoid significant adverse effects on financial stability. In this specific case, losses were fully absorbed by shares and subordinated debt. The customers of Banco Popular will continue to be served with no disruption to the economy. All depositors continue to have uninterrupted access to the full amount of their deposits. Following the resolution decision, the bank can continue its business activities. No state aid nor aid from the Single Resolution Fund has been provided and the sale is subject to normal merger and regulatory review. The EC has endorsed this resolution scheme because the conditions for resolution were met: the bank was failing, there were no private sector solutions outside of resolution, and there were no supervisory actions that would have prevented its failure. Resolution by sale of business is foreseen in the BRRD under the EU bank resolution framework.
Since the BRRD entered into force on January 01, 2015, a resolution authority can decide to resolve a bank, provided it deems that it is in the public interest to do so. For banks that are subject to the Single Supervisory Mechanism (SSM), under the Single Resolution Mechanism Regulation, it is for the SRB to determine that a bank should undergo resolution in case the bank is failing or likely to fail, there are no alternative private solutions or supervisory actions that would prevent its failure, and a resolution action was necessary in the public interest. In that case, it transmits a resolution scheme to the EC for approval.


Related Links

EC Press Release

SRB Press Release

ECB Press Release

Keywords: Europe, EC, Banking, BRRD, SRB, Resolution Framework


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