Editorial Board
Europe (Finally) Shows How to Deal With a Failing Bank
Move quickly, protect deposits, and force losses onto shareholders and junior creditors.
With shareholders and junior creditors, not so much.
Photographer: Angel Navarrete/BloombergCredit where credit's due: The sale for 1 euro of Banco Popular Espanol SA, a failing Spanish bank, to rival lender Banco Santander SA shows how the euro zone should handle such cases. The regulators acted swiftly and fairly. Global markets barely noticed. This is a model for future interventions.
Banco Popular's troubles date back to Spain's real-estate crisis, which left the lender with 37 billion euros in nonperforming loans. The bank reported a 3.6 billion-euro loss for the last financial year, spooking investors and leaving regulators looking for a solution.