Banco not so Popular among investors: Bondholders explore legal action after Santander deal


Santander bought Banco Popular for €1 earlier this month (Source: Getty)

A group of Banco Popular bondholders is exploring taking legal action over the fate of the Spanish lender.

Santander agreed a takeover of the struggling Popular earlier this month for a nominal €1 after the European Central Bank (ECB) said the lender was “failing or likely to fail”. Equity and junior bonds were written off in the process.

And now bondholders, including Pimco, Anchorage, Algebris and Ronit Capital, have taken on law firm Quinn Emanuel Urquhart & Sullivan LLP to explore their litigation options.

The law firm said it would be looking into the “actions and communication” from regulators that led to the “failing or likely to fail” assessment; actions and communication from the bank’s management “that prevented an achievable private sector resolution in a reasonable timeframe”; and the “regulatory appraisal that led to the adoption of decisions that resulted in an unwarranted resolution outcome and the unjustified full write down of capital instruments”.

Lead partner Richard East said the funds represented have “suffered disproportionate and unnecessary losses” through the situation.

He added: “A number of serious issues have already emerged and we will be reviewing the resolution scheme and the events leading up to the decisions taken and, where necessary, bringing claims to restore the position and/or to seek damages.”

Read more: Investors wary of Spanish banks following Banco Popular flop

Tags: Santander