SRB has decided that no compensation is due to shareholders and creditors affected by the resolution of Banco Popular Español, S.A. 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. A summary of the SRB decision will also be published in the Official Journal of the European Union.
Banco Popular was resolved on June 07, 2017, following the ECB assessment that it was failing or likely to fail. SRB decided that resolution was in the public interest 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 Banco Popular 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 analyzed hypothetical insolvency scenarios in the 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 August 06, 2018, 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 on why they may not agree with the preliminary decision and its underlying reasoning. 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, SRB adopted its final decision, which was addressed to FROB, which is the national resolution authority that implemented the resolution decision. This final decision is the last step in the formal process following the resolution of Banco Popular. The SRB Chair, Elke König said, “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.”
- Press Release
- SRB Decision (PDF)
- Right To Be Heard Process
- Clarification Document (PDF)
- Valuation 3 Report
Keywords: Europe, EU, Banking, Resolution Framework, Banco Popular, Right to be Heard, FROB, SRB Decision, BRRD, SRB
Previous ArticleRBNZ Announces COVID-19 Relief Measures for Financial Institutions
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.