The EU Court endorses the dissolution of Banco Popular and refuses to return the money to the shareholders

The Court of Justice of the European Union (CJEU) has endorsed this Wednesday the dissolution of Banco Popular after completely dismissing the appeals filed by the shareholders against the resolution of the banking entity in 2017, and transferred to Banco Santander for a euro, for which it rejects the return of the money from the shares and compensation to the plaintiffs.

European justice frees Banco Santander from indemnifying Banco Popular shareholders

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The magistrates rejected various appeals filed by the Tatiana Pérez de Guzmán el Bueno Foundation and the SFL Foundation, the Mexican businessman Antonio Del Valle Ruiz, the Eleveté group and the Algebris, Anchorage and Ronit and Aeris funds.

The judgment of the high European court, on which appeal is possible, argues that the Single Resolution Board (SRB) and the European Commission "did not commit a manifest error of assessment" when considering that Banco Popular "was in great difficulties or probably I was going to be."

Thus, it points out that the liquidation of Banco Popular was adopted "validly" and "regardless" of the reasons that led the bank to find itself in difficulties.

The General Court considers that the applicants have not demonstrated the existence of alternative measures to resolution and that the SRB and the Commission did not commit a manifest error of assessment in considering that there was no reasonable prospect that other alternative measures of the private sector or of supervision could prevent Banco Popular from becoming unviable within a reasonable period of time.

Regarding the appeal filed by the shareholders in which they indicate that their right to be heard was violated within the framework of the resolution procedure of Banco Popular, the CJEU points out that the non-existence of a provision that provides for the process of hearing the shareholders and creditors of the entity in question and the fact that the plaintiffs were not given a hearing constitute a limitation of the right to be heard that is justified and necessary to respond to an objective of general interest and that respects the principle of proportionality.

According to the European magistrates, these hearings would have jeopardized the objectives of protecting the stability of the financial markets and the continuity of the essential functions of the entity and the requirements of speed and efficiency of the resolution procedure.

The Court also rejects the ground based on the fact that the Commission did not examine the resolution device before approving it, stressing that the Commission designates a representative authorized to participate in the meetings of the SRB, as a permanent observer and that his representative has the right to participate in the discussions and has access to all documents. Thus, having participated in several meetings with the SRB, the Commission had been involved in the different phases prior to the adoption of the resolution device and had been aware of the preliminary drafts of said device and had participated in its drafting.

In addition, it points out that it has not been shown that the SRB or the Commission disclosed confidential information relating to the application of a Banco Popular resolution procedure and, therefore, no breach of the principle of confidentiality or the duty of professional secrecy has been detected. .

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