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Wiped Out Banco Popular Creditors Question EU on Resolution

Updated on

Lawyers representing a group of Banco Popular SA’s wiped out junior bondholders sent a letter to the European Parliament questioning the transparency and valuation of the Spanish bank’s resolution.

Quinn Emanuel Uruhart & Sullivan LLP represents holders of about 850 million euros ($969 million) of junior debt, according to the letter dated July 10 and seen by Bloomberg News. Pacific Investment Management Co., Anchorage Capital Group, Algebris Investments and Ronit Capital are among investors seeking to challenge the forced write down of additional Tier 1 and Lower Tier 2 bonds.

The letter was addressed to Roberto Gualtieri, head of the European Parliament’s Economic and Monetary Affairs Committee, and sent ahead of a public hearing on Tuesday with Elke Koenig, who leads the Single Resolution Board that imposed losses on the debt. Questions focused on transparency, media statements and independent valuation of the bank.

“There are a number of serious matters and questions from the events leading up to the SRB’s exercise of its powers and the adoption of the Resolution Scheme which merit the Committee’s close attention,” the letter said.

Richard East, a partner at Quinn Emanuel, confirmed the contents of the letter and declined further comment. A spokesman for Gualtieri declined to comment.

The Brussels-based SRB forcibly sold Banco Popular to Banco Santander SA on June 7, wiping out about 2 billion euros of junior bonds that had traded at face value as recently as April. Pimco held about 280 million euros of the affected notes, according to regulatory filings at the end of March. New York-based Anchorage lost about $140 million in its main fund, a person familiar with the matter said last month.

— With assistance by Alexander Weber

(Updates with reaction from Gualtieri in fifth paragraph.)
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