König (JUR) defends the dissolution of Popular as the “model” decision

The president of the Single Resolution Board (JUR), Elke König, defended this Monday the decision to dissolve Banco Popular, ordered by this body in 2017 and which caused losses to shareholders and creditors of the entity.

“Of course I maintain that decision. It was the right decision,” König said at the Annual Conference of the Single Resolution Board, after being asked about the decision to liquidate the Spanish banking entity and the alleged leaks to the press that would have caused his dissolution in mid-2017.

“In that sense, I think it was a model decision” said the president of the SRB who clarified that it was not an overnight decision and that “we are left with no options” since, as she has argued, liquidity can disappear “very fast”.

“We are not an institution that miraculously makes losses disappear, we are here to protect financial stability,” added König.

In addition, the president of the SRB has indicated that a bank cannot be declared bankrupt or that it is about to go bankrupt “if the criteria are not met” for each of the situations, adding that sometimes with “creative solutions to avoid those exits”, although he has specified that “each crisis is different”.

The president of the European Banking Authority (EBA), José Manuel Campa, also participated in the conference, who in a subsequent round table highlighted that much progress has been made in the dissolution processes but has indicated that there are still steps to be taken .

Campa has advocated improving transparency in dissolution processes, something that the EBA has been requesting for some time, and has called for more regulatory guidelines to achieve this transparency.

The president of the European Banking Authority has proposed defining the objectives pursued with this increase in transparency and what information should be provided to the markets, what can be “useful for the market” and “for the institutions”.

In this sense, he has urged to detail what is the optimal dissolution strategy for an entity to have greater clarity on whether the criteria are met and that the interested parties have information about what the process is like.