Spain

A group of bondholders in failed Banco Popular have filed an appeal against Spain’s banking bailout fund, their law firm said on Thursday, after the bank’s rescue landed them with 850 million euros ($1.02 billion) of losses, Reuters reported. European authorities orchestrated a rescue of Spain’s then sixth-biggest lender in early June which wiped out shareholders and junior bondholders while Popular was sold for a nominal one euro to larger rival Banco Santander.

When EU authorities wiped out some of Banco Popular’s bonds last month, it looked as if credit default swaps might finally compensate bank debt investors for their losses with little controversy, the Financial Times reported. Credit derivatives written against the failed Spanish lender’s junior debt were triggered in a matter of days and, given that these bonds were now worthless, it seemed self-evident to many that owners of the CDS would get paid in full.

Bankia and CaixaBank sold a combined €1.75bn of subordinated debt less than a month after similar securities were torched at Banco Popular, in a clear sign of the market's maturity, Reuters reported on an International Financing Review story. State-owned Bankia achieved the lowest ever coupon for a Spanish public Additional Tier 1 bond sale, the riskiest debt that banks can issue, beating national champions Santander and BBVA. The €750m no-grow perpetual non-call five-year (rated B+ by S&P), its inaugural AT1, priced at 6%.

CaixaBank is marketing the first Spanish Tier 2 since subordinated debt was wiped out at Banco Popular in June, and just a day before Bankia is expected to bring its inaugural Additional Tier 1, Reuters reported. Orders of over €2.75bn by the 11NC6's second update implied that investors are willing to overlook the punitive treatment of Tier 2 debt at Popular, even for second tier lenders. "It is a good credit and I'd expect it to go well, and the price looked fair," said a banker off the deal.

Talks between Spanish real estate company Reyal Urbis and its lenders have broken down, leaving the company just one step away from full liquidation, a source with knowledge of the talks said on Wednesday. Real Urbis has been in bankruptcy proceedings since 2013 and executives at the company have been in talks with its creditors in a last ditch attempt to avoid liquidation, which is likely to be triggered after they failed to get a majority of lenders on board for an agreement, Reuters reported.

Spain is calling for “aggressive” and rapid reforms of the single currency area, including the creation of a powerful pan-European treasury and a mechanism to force through labour market and other reforms in recalcitrant member states, the Financial Times reported. “We have a window of opportunity of no more than six months after the German elections [in September],” Luis de Guindos, the Spanish economy minister, said in an interview.

Within the space of six days, Europe has taken crucial decisions on the future of two banks that embody Italy and Spain’s very different approaches to navigating a financial crisis, the Financial Times reported. On one hand there is Banco Popular, Spain’s sixth-largest lender, which was sold to Banco Santander in the early hours of Wednesday after a frantic night’s work by EU and Spanish regulators.

The regime to deal with failing European banks cleared its first major hurdle Wednesday as the market shrugged off the resolution of Banco Popular and the wipeout of its subordinated debt, Reuters reported. After watching the bank wobble on the edge of insolvency for months, regulators eased market jitters with a relatively swift winding up of the Spanish lender. The Single Resolution Board bailed in the sub debt, wrote down the shares and Additional Tier 1 instruments, converted the Tier 2 debt to new equity - and won wide praise for doing so.

Worries about Banco Popular’s stuttering sale process sent shares to another record low on Monday morning, after two of the main potential bidders pulled out of the auction with less than a week to go, the Financial Times reported. The Spanish government appealed for calm on Friday as the bank’s shares dropped sharply, but investors appeared to be unconvinced on Monday morning. Shares in Popular were down a further 12.1 per cent at publication time at €0.363, having hit a low of €0.336.

Shares in Spanish lender Banco Popular have shed over 8 per cent this morning to at least a 28-year low, following reports that senior EU officials have warned the bank could be wound down if it fails to find a buyer. Yesterday, Reuters reported that Elke Koenig, the head of the eurozone body that winds up failing banks, issued an “early warning” on the state of the lender’s fate if it fails to complete a merger. Earlier this month, Spain’s sixth largest bank said it had received several approaches about a merger.