European justice endorses the dissolution of Banco Popular and its transfer to Santander

The General Court of the European Union (TGUE) 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 its transfer to Santander for a euro, so it rejects the return of the money of the shares or compensation to the plaintiffs.

Thomas Osborne
Thomas Osborne
01 June 2022 Wednesday 05:40
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European justice endorses the dissolution of Banco Popular and its transfer to Santander

The General Court of the European Union (TGUE) 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 its transfer to Santander for a euro, so it rejects the return of the money of the shares or compensation to the plaintiffs.

The judgment of the high European court, on which there is still an appeal, argues that the single resolution board and the European Commission "did not commit a manifest error of assessment" by considering that Banco Popular "was in great difficulties or was probably going to be to be."

Thus, it points out that the liquidation of the bank was validly adopted and regardless of the reasons that led the bank to find itself in difficulties. In addition, the General Court has indicated that the resolution procedure "pursued an objective of general interest", referring to the objective of guaranteeing the stability of the financial markets.

In June 2017, the European Commission approved the resolution of Banco Popular and its transfer to Santander after the resolution board considered that the conditions for adopting the resolution of the banking entity were met, it fully depreciated the nominal value of its share capital , which implied the cancellation of the shares, and transferred the new shares to Santander.

The sentence comes after several lawsuits filed by investment funds, individuals and foundations that own shares of Popular, which sought the annulment of the dissolution of the banking entity and demanded compensation or the return of the amount of the shares.

Among the arguments put forward by the plaintiffs are the violation of the right to be heard, justified in the court's opinion by the objective of guaranteeing the stability of the financial markets; the violation of the right to property that the court has considered "a justified restriction", or the delegation of powers that the sentence indicates that "the Union legislator has entrusted an institution with legal responsibility".

The plaintiffs have not demonstrated the existence of alternative measures to the dissolution of Banco Popular, according to the General Court, reason why it argues that the European Commission and the board did not make an error in estimating that there were no other alternative measures that " could prevent the inviability of Banco Popular within a reasonable period of time".