Specialized in Banking and Financial Law

Banco Popular stocks and bonds

What are Banco Popular Convertible Bonds?

The controversies and controversy with Banco Popular is due both to its shares and to convertible bonds. Convertible Bonds are hybrid fixed-income products that entities regularly use to finance themselves. They are offered to the client as a fixed income product, and upon maturity they must be convertible into shares of the entity.

These are complex products, classified as such by the legislation itself, which should be the subject of clear and extensive information from the entity to its client.

BONUSES I / 2009 exchanged for BONUSES II / 2012

In 2009, Banco Popular placed 700 million euros in debt, in the Banco Popular Subordinated Bonds product, which combined fixed and variable profitability. These bonds had a maturity of 4 years –in 2013–, when they would be exchanged for shares, becoming a variable income investment.

To make the issue attractive, Banco Popular offered an initial remuneration of 7%. However, it did not offer clear and understandable information about the risks of the operation, and above all, what happened at the time of the “conversion” into shares, the price conversion rate, and the potential for the customer to lose their initial investment.

In May 2012, Banco Popular carried out a new issue for I / 2009 Bond holders, hiding their economic reality. The Bank made an “exchange offer” of the old I / 2009 Bonds for the new II / 2012 Bonds, just to buy time and prevent clients from discovering that they were losing their savings.

II / 2012 BONDS maturing November 25, 2015.

Faced with this situation, for another three years, 95% of the holders of the I / 2009 Bonds exchanged them for the new “Subordinated Bonds mandatorily convertible into Banco Popular shares, II / 2012”.

Consequently, November 25, 2015 was the day on which the mandatory exchange for shares actually took place; and in which losses of around 80% of the investment materialized, which denotes the banking malpractice of Banco popular.

What has happened to Banco Popular's shares?

Banco Popular made a major capital increase in May 2016, putting 2,000 million new shares up for sale at a price of 1.25 euros each, which were acquired in their entirety. This operation was announced with “fanfare” through a massive marketing campaign led by basketball player Pau Gasol, who described the bank as a successful business model, and the operation as an excellent investment opportunity with a good profitability. The economic information published at the time of the capital increase reported a net profit of 94 million euros, 2.6 more than in the first quarter of the previous year.

However, in a very short time the stock depreciated and investors began to lose money. In April 2017, the Bank corrected the accounts presented as a result of various external auditors detecting that some items had not been correctly accounted for, and that the impairment came from years prior to the capital increase. Just one year after the capital increase, the Bank reports losses of 137 million euros in the first quarter of 2017. The serious situation in which the Bank found itself precipitated that the European Central Bank determined that the Bank was on the verge of fall, and with the help of the Fund for Orderly Bank Restructuring, it will activate a mechanism to sell it for one euro to Banco Santander.

Can I recover the money lost with Banco Popular?

Yes. In fact, there are many court decisions that condemn Banco Popular (currently Banco Santander) to return the money from the purchase of shares in the 2016 capital increase.

Likewise, regarding the capital increase in 2012, there are more and more resolutions that condemn Banco Popular, since on July 9, 2020, the Provincial Court of Madrid issued a pioneering ruling admitting that there were economic problems in Banco Popular since year 2012.

BBS Abogados, experts in Banco Popular stocks and bonds.

At BBS Abogados, experts in Banco Popular stocks and bonds, we are endorsed by multiple favorable judgments. If you are also affected by the actions of Banco Popular, do not hesitate to contact us to help you get your money back. You can call us at 93 760 53 55, write to us at bbsabogados@bsabogados.com, or fill out the web form.

Novedades Banco Popular