No creditor is better off without a good Popular precedent

Market participants should not become complacent about the battles that are still taking place over the handling of the resolution of Banco Popular, because the outcome is likely to form the blueprint for what will happen when any large European bank fails in the future.

  • By Tyler Davies
  • 07 Aug 2018
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The release this week of the third and final valuation of Banco Popular’s balance sheet marked a critical stage in the rationalisation of its resolution.

The report had long been sought after by investors that lost money when the Spanish bank failed because they will be due compensation if an assessment shows that they would have been any better off in an insolvency scenario.

Following the publication of the “no creditor worse off” report, it would be tempting to suggest that the end of all the post-resolution posturing has been reached.

The Single Resolution Board (SRB) will not be handing back any money to the shareholders or subordinated bondholders that it wiped out last June, and the arguments coming from the affected creditors are starting to sound a little repetitive.

But the Popular case is far from being closed, and those with any interest at all in the status of banks in Europe should be keeping a clear record of what has happened so far.

You do not have to disagree with any part of the way in which the SRB handled the failure of Banco Popular to think that it is important that the resolution authority remains open and justifies its decisions in a transparent manner.

The SRB has already been told twice by its appeal panel that it should make more information about the resolution public. In February, it was told to publish certain “non-confidential” parts of its resolution decision and initial valuation report for Popular. In June it was then told that the published versions of these documents were too heavily redacted. The market is still waiting for the SRB to have a third go at providing the proper transparency around the early stages of its resolution decision.

In the meantime, it will be worth watching what the courts make of the calls from affected shareholders and creditors for greater access to information about Popular’s collapse.

Market participants are expecting the US federal court for the Southern District of New York to reach a decision this month on whether or not Banco Santander should have to hand over records relating to its purchase of the failed bank for €1.

Further down the line, the focus will shift towards the Court of Justice of the European Union, as investors continue to push for full access to information about Popular’s demise.

These scattered arguments may seem academic, but they are no less important now than they were a year ago.

Popular was the first bank to have been put into resolution according to the terms of new rules giving the SRB sweeping powers to deal with failing banks as it sees fit.

Whether you think the SRB handled the Popular resolution correctly or not, it is in everybody’s interest that the newly christened resolution authority is subject to a proper process of accountability, giving the public the level of transparency it deserves following such an important shift in bank crisis management.

We are not there yet, but the outcome of the battles happening now will set the precedent for what happens the next time a bank faces financial problems.

  • By Tyler Davies
  • 07 Aug 2018

Bookrunners of Global Covered Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 9,704.99 54 5.49%
2 UniCredit 9,192.82 61 5.20%
3 LBBW 8,744.00 54 4.95%
4 Natixis 8,477.22 42 4.80%
5 Credit Suisse 8,000.81 42 4.53%

Bookrunners of Global FIG

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Bank of America Merrill Lynch 64,642.45 228 6.58%
2 JPMorgan 63,002.07 249 6.42%
3 Citi 60,945.09 285 6.21%
4 Goldman Sachs 57,687.34 470 5.88%
5 Morgan Stanley 51,366.23 277 5.23%

Bookrunners of Dollar Denominated FIG

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Bank of America Merrill Lynch 54,011.37 190 11.14%
2 JPMorgan 53,201.53 180 10.97%
3 Citi 49,399.51 226 10.19%
4 Goldman Sachs 43,055.88 416 8.88%
5 Morgan Stanley 39,744.53 217 8.20%

Bookrunners of Euro Denominated Covered Bond Above €500m

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Natixis 6,511.67 24 7.36%
2 UniCredit 5,302.66 21 5.99%
3 Deutsche Bank 5,002.94 16 5.66%
4 LBBW 4,987.08 21 5.64%
5 Commerzbank Group 4,984.41 19 5.63%

Global FIG Revenue

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 02 May 2016
1 Morgan Stanley 365.83 497 7.62%
2 JPMorgan 332.66 618 6.92%
3 Bank of America Merrill Lynch 299.89 590 6.24%
4 Goldman Sachs 276.71 375 5.76%
5 Citi 264.54 592 5.51%

Bookrunners of European Subordinated FIG

Rank Lead Manager Amount €m No of issues Share %
  • Last updated
  • Today
1 HSBC 4,729.28 11 10.98%
2 Barclays 3,919.93 12 9.10%
3 UBS 3,374.07 13 7.83%
4 BNP Paribas 3,351.70 12 7.78%
5 Credit Agricole CIB 2,490.29 7 5.78%