The Court of Auditors of the European Union has validated today, Wednesday, the position held by the Single Resolution Board (JUR) and describes as “remote” the risk that the pending appeals for the resolution of the Banco Popular case will be resolved against it. in 2017. Hence, the European body did not communicate any financial risk linked to these litigations during the past year.
This is what is collected – and Efes reports – by the community auditors in a report from 2022, who are obliged to report each of the contingent liabilities – they reflect the financial risk to which the institution is exposed – derived from the debt resolution functions. the SRB, the European Commission and the European Council.
The JUR, which is responsible for intervening in the event of possible large bank bankruptcies, did not report last year any contingent liabilities linked to the judicial appeals that are pending in the European and national courts against the Popular resolution.
More specifically, at the end of 2022 there were a total of 104 cases pending resolution before the European Justice, whose General Court ruled in June of that year that the decision to resolve the bank was legal and therefore dismissed the requests for compensation and sentenced in costs the plaintiffs. Five appeals have been filed against the verdict.
Judicial processes opened in Spain
Regarding the 334 procedures opened in Spain against the FROB, which executed the resolution, the SRB also demonstrated that the risk of rulings being issued contrary to the FROB “is remote”, an opinion also supported by the European Court of Auditors.
“In light of the rulings of the General Court (…) and the reasons invoked by the appellants, the SRB considers remote the probability of a negative result in these new cases,” explain the auditors, who found “no evidence “That they contradicted the JUR’s evaluation.”
At a general level, the SRB did not declare contingent liabilities in 2022 for any of the other eleven judicial appeals against the resolution decisions it has taken so far, including the resolution of the European subsidiaries of the Russian bank Sberbank following the sanctions for the Ukrainian war.
In the case of procedures before the European justice system, because it does not see the risk that they will generate an outflow of economic resources and, in the case of national ones, because it cannot estimate the possible financial impact if the courts force it to compensate for damages. . and damages.
How much money would be at risk?
On the contrary, the SRB did declare that 1,887 million euros would be at risk due to the 39 judicial appeals against the calculation of the contributions required from banks to finance the Single Resolution Fund, intended to finance European resolutions if the rest of resources.
This represents a significant increase compared to the 5.5 million declared in 2021 in relation to eight judicial matters for this cause, and to them are added another 4.6 million in contingent liabilities for the other resources that claim the payment of costs.
The Court of Auditors ratified this statement, since they are not aware of “any indication of impropriety”, but asked the SRB to strengthen its control systems to better document its reasoning on those pending judicial matters in which it remotely estimates the possibility of decide against you and you have to make some design.
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