The European Justice endorses the resolution of Banco Popular and refuses to return the money to the shareholders

Daniel KnightCONTINUEMadrid Updated:06/01/2022 12:25h
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The General Court of the European Union has endorsed the resolution process of Banco Popular, as well as its subsequent award to Santander for the symbolic price of one euro. Community Justice recalls in its ruling, with regard to property rights, "that Banco Popular was in serious difficulties or was probably going to be and that there were no alternative measures that could prevent this situation."

On June 7, 2017, the Single Resolution Board (SRB) adopted the resolution device and the European Commission approved the decision. The shareholders and bondholders lost all their investment and have come to Europe to demand the annulment of the procedure and
restitution of lost money or compensation

. But the General Court has denied their claims.

“The decision to write off and convert the capital instruments of Banco Popular in the resolution device does not constitute an excessive and intolerable intervention that affects the very essence of the property right of the plaintiffs, but must be considered a justified and proportionate restriction of their right to property," says the ruling.

Community Justice understands that the resolution procedure of the entity ultimately chaired by Emilio Saracho was necessary to guarantee "the stability of the financial markets"; in short, an objective of "general interest" was being pursued.

In this sense, the court maintains that neither the SRB nor the Commission incurred "in a manifest error of assessment in estimating that Banco Popular was in serious difficulties or was probably going to be". Likewise, it is pointed out that the resolution device was validly adopted regardless of the reasons that led Banco Popular to find itself in serious difficulties or probably to be.

Beyond this, 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 were no reasonable prospects that other measures Private sector or supervisory alternatives could prevent Banco Popular from becoming unviable within a reasonable period of time.

For all these reasons, the European Justice "excludes the non-contractual liability of the SRB and the Commission". In this regard, it states that the plaintiffs have not shown the existence of illegal behavior by the SRB or the Commission.

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