Are you affected by the convertible bonds into shares of Banco Popular?

The Popular Bank’s Convertible Bonds These are investment securities that were traded between 2009 and 2012. These bonds were automatically converted into shares on a specific date, 25 November 2015. Upon maturity, the investor had no protection against falls in the share price.

Are Popular’s bonds convertible into shares legal?

The Supreme Court has ruled against Banco Popular in the Judgment of 17 June 2016. It states that the bonds convertible into Popular shares are a complex and high-risk product that required the bank to fulfil its duty to provide detailed information. He claims that the information was not provided in a clear and comprehensible manner, stating that the bank “failed to comply with the requirements regarding complete, clear and accurate information, which meant that the client’s declaration of intent was vitiated by a material and excusable error concerning the true nature, risks and suitability of the product”.

Following the Supreme Court’s ruling, Those affected may recover the money invested, plus statutory interest from the date of the investment, less any interest received on the investment.

What is happening now with Banco de Santander’s “Loyalty Share” offer?

Banco Santander, which recently acquired Banco Popular, has launched an initiative – the “Loyalty Scheme” – in an attempt to compensate those affected. It is important for the customer to consider it carefully before rushing into accepting it, as it is subject to certain restrictions.

The loyalty scheme offer consists of the the issue, at no cost to the customer, of bonds entitling the holder to a discretionary, non-cumulative cash coupon at a nominal annual interest rate of 1%, payable quarterly. These are perpetual bonds issued by Banco Santander, with a face value of 100 euros, which may be redeemed after seven years at Banco Santander’s discretion, subject to authorisation by the European Central Bank.

What happens if I accept Banco de Santander’s offer?

If the customer accepts this offer, they must agree not to take legal action against the bank. Furthermore, they must maintain a business relationship with the bank equivalent to the one they had at the time of the acquisition of the Banco Popular’s convertible bonds.

We recommend that, before signing any document presented to you by the bank, you seek advice from AURIS LAWYERS and we will let you know which option is best for you.

Anna Compte

Commercial Department
Civil contracts
Corporate disputes