Banco Popular investors launch legal bid to annul fire sale to Santander

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Banco Popular was bought by Spanish rival Santander for €1 in June (Source: Getty)

Banco Popular bondholders today launched legal action to overturn decisions made by European authorities that paved the way for the collapsed Spanish banking giant to be bought by Santander for €1.

Lawyers from Quinn Emanuel have filed a claim on behalf of a number of “material” bondholders including Anchorage Capital, Algebris and Ronit Capital.

The legal action, filed at the European Court of Justice wants to annul decisions made by the European Commission and the Single Resolution Board (SRB) – the entity set up to address bank failure.

Read more: Banco Popular share price plummets 17 per cent amid winding down fears

Facing a run on the bank in June that saw around €1bn withdrawn every day, shareholders and junior bondholder investments became all but worthless after regulators said Banco Popular was “failing or likely to fail”.

Prior to regulators getting involved Banco Popular’s share price had been falling over fears the lender was struggling under the weight of toxic real estate assets.

Today’s action is one of a number being filed by equity and debt investors against authorities.

Quinn Emanuel partner Richard East said:

The SRB’s breaches of professional secrecy, including public comments that it was ‘watching’ Banco Popular, undermined investor confidence and resulted in a run on the bank. Ironically, the SRB itself made statements that exacerbated the ‘formidable run on liquidity’, which were then relied upon to justify the resolution scheme.

The bondholders are not seeking specific damages. instead, they want to reverse the actions by authorities. This could reinstate them as lenders to the bank.

Read more: Banco Popular to ditch €30bn of toxic assets

Tags: Santander