MADRID: European authorities announced Wednesday the sale of Spain’s Banco Popular to compatriot Banco Santander to avert a looming failure of the troubled lender in a solution that will not leave Spanish taxpayers to pick up the tab.
The European Central Bank, in its capacity as the eurozone’s banking supervisor, said that Banco Popular was “failing or likely to fail” following a “significant deterioration of its liquidity situation.”
And as a result, it would be sold to Banco Santander. It was the first time such a decision has been taken since the ECB took over the role as Europe’s banking supervisory authority in November 2014.
“The significant deterioration of the liquidity situation of the bank in recent days led to a determination that the entity would have, in the near future, been unable to pay its debts or other liabilities as they fell due,” the ECB explained.
“Consequently, the ECB determined that the bank was failing or likely to fail and duly informed the Single Resolution Board (SRB), which adopted a resolution scheme entailing the sale of Banco Popular Espanol to Banco Santander.”
The SRB — tasked with ensuring an orderly resolution of failing banks with minimal costs to taxpayers and to the real economy — said in a separate statement that it had “transferred all shares and capital instruments” of Banco Popular to Banco Santander.
The purchase price paid by Santander was the symbolic price of one euro.
“This means that Banco Popular will operate under normal business conditions as a solvent and liquid member of the Santander Group with immediate effect,” the SRB said.
