The General Court of the European Union has rejected this Wednesday that the creditors and shareholders of Banco Popular claim compensation from the Single Resolution Fund (SRF) after the purchase of the entity by Santander in 2017. It also does not support the thesis of the lack of independence of Deloitte, the audit that certified its liquidation.
In June 2017, Banco Popular was purchased for the symbolic value of one euro by Santander. It was the first ordered by the Single Resolution Board, an EU agency, which considered acting in an emergency situation. The operation cost 11.4 billion euros, which was paid in full by shareholders and creditors.
According to the regulation, if it is proven that the shareholders or creditors of an entity that has been subject to a resolution measure have suffered greater losses than they would have suffered in the event of the bank's liquidation, the SRF, an emergency fund that can be used in times of crisis and which is financed by the banking sector itself, could pay compensation.
In the case of the purchase of Banco Popular, an independent appraiser (the consulting firm Deloitte) carried out an analysis that determined what should be done in the event of a hypothetical liquidation of the entity and determined whether the resolution was more advantageous for investors. and creditors than an ordinary liquidation.
After this, shareholders and creditors presented their allegations in which they questioned the independence of Deloitte's auditors, in addition to considering that their rights to be heard were violated. The ruling dismisses the appeals and ensures that the audit was based on "a correct methodology and did not make manifest errors when valuing the assets of Banco Popular."
According to the judges, the result with an ordinary insolvency procedure “would have been, consequently, the same as that of the resolution, so that the property rights of the affected shareholders and creditors were not violated,” they conclude.
The ruling can still be appealed to the Court of Justice of the European Union. A year and a half ago, the CJEU already ruled that, under the Restructuring and Resolution Directive, it is the shareholders, followed by the creditors, who must bear priority the losses suffered following a resolution. Which confirms that it is not the taxpayers who have to pay in the event that a bank fails.
