Banco Popular restructuring proves EU resolution can work

Author: Amélie Labbé | Published: 14 Jun 2017

Santander’s takeover of troubled competitor Banco Popular last week was a first on many grounds. It was the first resolution under the Bank Recovery and Resolution Directive (BRRD), the first time that the Single Supervisory Mechanism (SSM) has labelled a bank as failing, and the first decision taken under the EU’s resolution scheme.

The restructuring, which officially happened after Santander paid €1 ($1.12) for Spain’s fifth-largest bank, is the first illustration of a resolution framework that has been several years in the making. First steps were taken after the financial crisis to strengthen the EU banking system and prevent taxpayer-funded bailouts, which resulted in the launch of the Banking Union in 2012. The SSM and the Single Resolution Board (SRB) are its two flagship initiatives.

The bank isn't popular with many people anymore"As a proof of concept, the SRB’s decision shows the system can work, and...