The Spanish Bank’s resolution process has led to numerous actions in the European courts
The Court of Justice of the European Union has ruled that investors who filed lawsuits against the conversion of their financial products into Banco Popular actions before resolution may continue to litigate now against Banco Santander.
In June 2017, the European Central Bank (ECB) decreed that the Spanish Bank Popular was not viable and determined its resolution, and then the Spanish Santander bought the Popular Bank for the symbolic price of a euro and also in exchange for capital injections.
Since then, this resolution process has led to many actions in the European courts.
In a new decision related to the resolution of Banco Popular, reported this week, the EU Court has ruled that “the rights arising from the nullity and compensation actions brought before the resolution can be considered ‘overdue’ without having been final judgment before the resolution”.
The Court based in Luxembourg thus responds to the doubts raised by the Supreme Court of Spain regarding investors whose securities were converted into actions of the Banco Popular before the resolution and appealed to the court before the resolution.
In this week’s ruling, the court stresses that, according to the Bank Resolution Directive, the former popular action “may oppose this institution or its successor the obligations or credits arising from the reduced fund instruments that were already ‘overdue’ at the time of the resolution.”
For the court, these cases are distinct from the court proceedings placed after the resolution.
Thus, the European Court considers that the rights arising from nullity and responsibility prior to the resolution are due without the need for a final decision before the resolution.
Finally, the decision states that the recognition of the rights of these investors “does not compromise the financial stability” of the EU, nor “interferes disproportionately to the rights of potential acquirers of a credit institution” resolution, in this case, Banco Santander.
The resolution of Banco Popular and the purchase of this by Santander, in 2017, had impacts in Portugal for both Spanish banking groups to have operations in Portugal. Then, the Portuguese Santander Totta joined the Popular Banco Portugal.
