The collapse of Banco Popular into the arms of Santander last week sent a good many signals across the markets. Some believe it shows the new regulatory regime for banks is working. Others, such as fixed income investors, will be taking note of the unpredictable elements involved in this kind of resolution.

If CoCo (contingent convertible, also known as additional tier 1) investors should have expected losses, the subordinated (known as lower tier 2) investors might have been surprised at being wiped out. Moreover, this bank was not on the stress test danger list in 2016 and appeared to enjoy strong capital and liquidity ratios.