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Banco Popular bondholders file appeal in Spain over rescue
September 7, 2017 / 1:04 PM / 2 months ago

Banco Popular bondholders file appeal in Spain over rescue

MADRID, Sept 7 (Reuters) - A group of bondholders in failed Banco Popular have filed an appeal against Spain’s banking bailout fund, their law firm said on Thursday, after the bank’s rescue landed them with 850 million euros ($1.02 billion) of losses.

European authorities orchestrated a rescue of Spain’s then sixth-biggest lender in early June which wiped out shareholders and junior bondholders while Popular was sold for a nominal one euro to larger rival Banco Santander.

The group of bondholders, including PIMCO, Algebris, Anchorage Capital Group, Ronit Capital and Cairn Capital, filed the appeal against the FROB bailout fund with Spain’s High Court on Wednesday.

The lawsuit is part of efforts by bondholders to find out more about the process behind Popular’s resolution and recoup their losses, their law firm, Quinn Emanuel, said in statement.

“The FROB resolution lacked the necessary justification, which made it impossible for stakeholders to evaluate the reasons, the legal basis or the valuation underpinning the FROB resolution,” Richard East, a lawyer at Quinn Emanuel, said.

The appeal contests the FROB’s resolution of Popular - which followed instructions from the Single Resolution Board, the EU body to liquidate banks.

Some 1.9 billion euros of subordinated and convertible bonds were wiped out.

Popular had a stock market valuation of around 1.3 billion euros the day it was bailed out.

Quinn Emanuel represents holders of 850 million euros of junior bonds in Banco Popular, according to a July 10 letter seen by Reuters which was sent to the European Parliament.

The Spanish case follows lawsuits filed by bondholders and shareholders to the General Court of Justice of the European Union asking for the rescue to be reversed and their bonds restored.

Several Spanish consumer groups representing small shareholders have also lodged claims against the SRB’s intervention with Europe’s top court, as has a group of Mexican investors in the bank, headed by billionaire Antonio del Valle, who had a 4 percent stake in Popular.

Spanish taxpayers were spared from footing the bill and the bank’s savers and activities were not affected as Santander took over the ailing lender.

$1 = 0.8354 euros Editing by Angus Berwick and Jason Neely

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