International Finance

Bondholders launch legal action against Banco Popular resolution

Banco Popular was sold to Banco Santander for €1

A group of bondholders has filed legal proceedings against Spain’s bank bailout fund, the Fund for Orderly Bank Restructuring (FROB), over its role in the resolution of Banco Popular. The group late Wednesday filed a contentious-administrative appeal with the Spanish National Court, part of a legal effort to achieve clarity around the Banco Popular resolution process and restitution for economic losses.

Lead partner Richard East of the law firm Quinn Emanuel, who represents the bondholders, said, “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.”

The filing contests the FROB’s resolution in which shares and junior bonds of Banco Popular were written off and the bank was sold to Banco Santander for €1.

The group of bondholders includes PIMCO, Anchorage Capital Partners, Algebris, Ronit Capital and Cairn Capital. The investors collectively were material holders of bonds issued by Banco Popular. The group includes funds that invest on behalf of pension funds, retail investors and charitable institutions. Andersen Tax & Legal is acting as Spanish legal counsel for the bondholders.

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