I

The prudential supervision of credit institutions and investment firms is aimed at ensuring the stability of the entire Spanish financial system, avoiding the emergence of crises between entities that make up your fabric. The recent financial crisis has highlighted the imperfections of financial markets around the world in the areas of financial legislation and supervision.

At present, national supervisory public activity is insufficient in a context of increasingly international markets that require efficient and effective coordination of the various supervisors. These arguments are intensified if we analyse the situation at European level, given the high level of integration of the financial markets in the Union, where the borders between the national markets in which financial institutions The development of their activity has been progressively dissipated.

On the other hand, a phenomenon that has been at the root of the crisis has been the development of increasingly opaque financial instruments such as securitisation structures, the risk of which was often difficult to assess for investors. Securitisation is an effective and significant instrument for the smooth functioning of the financial system, given its role of risk diversification and refinancing. However, to date there has been a serious problem of asymmetric information between originator or sponsor, more informed about the characteristics of the structure that it intends to securitize and the quality of the underlying assets and, the investor, much less informed.

In addition, it is appropriate to strengthen the solvency of institutions with the requirements of better quality capital, as well as to avoid excessive concentration of risks to limit the systemic effects of the failure of any entity in the rest of the financial system. Also in this line, new requirements are developed with respect to the liquidity risk that refers to the institution's inability to meet its payment obligations at a certain point in time resulting from the rush of assets and turns potential losses into realized. The financial crisis has shown that the measures introduced so far have not sufficiently taken into account this risk.

Finally, in order to prevent remuneration policies from undermining the soundness of financial institutions and destabilising the banking system through the creation of incentives for individual ownership behaviour. (a) a new regime for the remuneration policies of financial institutions is developed with regard to the categories of employees who, in the course of their duties, may have potential effects on the profile of the financial institutions; risks of the entities.

For all of the above, a process of reform of the prudential rules in line with what was discussed at the G20, in the Financial Stability Committee and in line with the amendments of the European Union, has been launched in the European Union. called the Basel Agreement that have been carried out.

It is in this sense that Directive 2009 /111/EC of the European Parliament and of the Council of 16 September 2009 amending Directives 2006 /48/EC, 2006 /49/EC and 2007 /64/EC as regards the banks affiliated to a central body, certain elements of own funds, large risks, the supervisory regime and crisis management, which is the first stage of this process and the Parliament's Directive 2010 /76/EU European Commission and the Council of 24 November 2010 amending Directives 2006 /48/EC and 2006 /49/EC with regard to the capital requirements for the trading book and the re-securitisations and the supervision of remuneration policies.

With the adoption of these directives, a number of fundamental reforms are addressed, including: the setting of conditions for the eligibility of hybrid capital instruments as own resources; improving cooperation between supervisors to strengthen the framework of the European Union on crisis management, and the determination of a number of requirements to allow exposure to securitisation positions and the trading book of the entities in addition to establishing rules on remuneration policies.

By Law 2/2011 of 4 March, of Sustainable Economy and, fundamentally, Law 6/2011 of 11 April, amending Law 13/1985 of 25 May, of coefficients of investment, own resources and obligations of information of the financial intermediaries, the Law 24/1988 of 28 July, of the Stock Market and the Royal Decree of 28 June 1986 on the adaptation of the existing right in the field of credit institutions to that of the Communities The first phase of incorporation into our system of the two has been carried out in Europe. directives. This royal decree seeks to develop this legal standard, making substantial progress in the process of transposition of the two Community directives mentioned above. However, this is a partial transposition in so far as the technical specification of a good part of the two Community rules makes it necessary to complete the transposition process into lower-ranking provisions.

on the other hand, in line with the forecasts that in the field of deposit guarantee funds are being carried out at European level, a new regime of additional contribution to these funds is introduced based on the remuneration of the deposits themselves.

II

The royal decree consists of a single article amending the Royal Decree 216/2008 of 15 February on the own resources of financial institutions and affecting both their Title I (credit institutions) and their Title II (investment firms), as in some of its transitional arrangements. This Article is divided into thirty-five paragraphs, to which a derogation provision and five final provisions are added.

Paragraphs one to twenty-one contain the provisions relating to credit institutions and which aim to improve the quality of the credit institutions ' own resources; the requirements of the own for the risk arising from the trading book in order to equate its treatment with that of the bank portfolio; the regulatory provisions relating to the new prudential regime for securitisations introduced in Law 6/2011 of 11 In April, the improvements introduced in the regime of the limits to exposures to major risks; the (a) the new prudential requirements for liquidity risk; the various aspects related to the supervisory activity of the Banco de España and its cooperation with the financial supervisory authorities of other Member States of the Union This is the case for the European Union and the requirements for the remuneration policy of credit institutions. In paragraphs 22 to 29, the above provisions are set out in the same way as those adapted to investment firms.

The modification of Royal Decree 216/2008 of 15 February, with paragraphs 30 to thirty and five, is concluded, in order to add an additional provision concerning the disclosure obligations of the Banco de España in relation to the securitisation positions of the institutions, the modification of the second transitional provision, related to the weighting of foreign exchange exposures and the addition of four new transitional provisions introducing different schemes transitional for the new prudential requirements set out in the royal decree.

Finally, the final provision first amends Royal Decree 2606/1996 of 20 December 1996 on deposit guarantee funds of credit institutions. Its purpose is to develop, for the first time in our country and in line with the work of the European Commission on this matter, a system of contributions to the funds of deposit guarantee of the entities based on the risk assumed by these. In particular, additional contributions are required of institutions that are excessively remunerated in their deposits, both in terms of time and in view. By this route, a new mechanism is designed to achieve such objectives.

Concludes the royal decree with three other final provisions that collect, respectively, the incorporation of European Union law, a normative rating to the Banco de España and the National Securities Market Commission for its development and implementation, and lastly, the final fifth provision sets the date of its entry into force on the day following its publication in the Official Gazette of the State.

In its virtue, on the proposal of the Minister of Economy and Finance, in agreement with the Council of State and after deliberation of the Council of Ministers at its meeting of June 3, 2011,

DISPONGO:

Single item. Amendment of Royal Decree 216/2008 of 15 February of own resources of financial institutions.

Royal Decree 216/2008 of 15 February of own resources of financial institutions is amended as follows:

One. Article 12 (1) (a) is amended as follows:

" The share capital of public limited liability companies, excluding the share of the same referred to in point (f) below, the contributions to the share capital of credit unions, and the endowment fund for branches of foreign credit institutions, in so far as they are fully used to absorb losses in normal situations and, in the case of competition or liquidation, have lower ranking than all other claims, as well as the funds and the shares participative of the savings banks, and the social fund of the Spanish Confederation of Savings Banks and the participatory shares of association issued by the latter. "

Two. Paragraph (i) of Article 13.1 is amended, which is worded as follows:

" (i) The amount of exposures in securitisations that receive a risk weight of 1250% and the amount of which has not been weighted in accordance with Section IV of Chapter III, and calculated in accordance with this established and the amount of the exposure to securitisation positions in the trading book that would receive a risk weight of 1250% if they were in the investment portfolio of the same credit institutions.

However, such amounts shall not be deducted if they have been included in the calculation of the risk-weighted exposure amounts in accordance with what is specified in this royal decree. "

Three. Article 14 is worded as follows:

" Article 14. Conditions for the computability of own resources.

1. For the purposes of its consideration as own resources, the capital of credit unions shall be composed of contributions from partners and associates who meet the following requirements:

(a) Your remuneration shall be conditional upon the existence of net results or, subject to the authorisation of the Bank of Spain, sufficient reserves to satisfy it.

b) Its duration will be indefinite.

(c) Your eventual reimbursement shall be subject to the conditions arising from Article 7 (4) of Law 13/1989, of 26 May, of credit unions.

2. The share of the share capital corresponding to the silent shares and the salvageable shares whose duration is not less than that provided for in paragraph 4 below for subordinated financing, as laid down in Section 2 of Chapter II of Title IV and Section III of Chapter II of Title XIV of the Royal Decree of Law 1/2010 of 2 July, approving the recast of the Law on Capital Companies, as well as any other type of actions or contributions the capital of credit unions which do not fulfil the conditions laid down in Article 12 (1) (a); or financial instruments presenting hybrid capital and debt characteristics shall be distributed among the basic and complementary own resources referred to in Article 15 in accordance with the conditions and limits to be established by the Bank of Spain taking into account its financial characteristics and, in particular, its:

a) full disbursement;

(b) remain, without prejudice to the fact that the instrument may contain an early repayment option in favour of the issuing institution, provided that such a clause cannot jeopardise the ability of the institution to continue having the own resources generated by the instrument in the event of financial difficulties;

(c) capacity to absorb losses, both in case of liquidation, and without the need to proceed to it; and,

d) full flexibility in the remuneration of the instrument, in cases where the institution may experience financial difficulties.

For their part, the preferred shares shall be subject, at all times, for the purposes of their computability as basic own resources, to the limit of 30% referred to in paragraph 1 (j) of the additional provision second of Law 13/1985 or to which the Bank of Spain establishes in accordance with that rule.

The terms of issue of the preferred shares may not include incentives for early repayment.

The Banco de España may grant authorization at any time for the early repayment of instruments with or without maturity in the event of a change in the tax or computing regime as such. own resources of those instruments that were not foreseen at the date of issue.

3. To be considered own resources, the reserves, funds and provisions referred to in Article 12.1 (c), (d) and (e) shall, to the satisfaction of the Bank of Spain, comply with the following requirements:

(a) To be freely usable by the institution to cover the risks inherent in the exercise of the banking activity, even before any losses or losses have been determined.

b) Reflect on the accounting of the institution, having been verified its amount with a favourable report by the external auditors of the institution and communicated such verification to the Banco de España.

c) Be duty free or reduce the amount of taxes that are likely to be attributable to them.

4. The subordinated financing referred to in Article 12 (1) (h) shall, for the five years preceding its expiry date, reduce the amount of such funds as own resources at a rate of 20% per year, until the remaining period is less than one year. year, at which time they will cease to be computed as such.

Subordinated financing may not contain redemption, redemption or early repayment terms, except in the event of liquidation of the issuing institution, and without prejudice to the Bank of Spain's being able to authorise the debtor's early repayment if the solvency of the institution is not affected or the assumptions referred to in the last subparagraph of paragraph 2 are produced.

The Banco de España will be able to set the general terms and conditions to the effect, to regulate both the early repayment and the repurchase of these types of instruments.

5. The Bank of Spain shall be responsible for the rating and inclusion in the own resources of a credit institution or a consolidated group of credit institutions of all types of preferred stock or preferred shares or financing. subordinated, issued in accordance with rules that are applicable, issued by the entities themselves or by instrumental companies and other subsidiaries.

In the exercise of the powers referred to in this Article, the Banco de España shall take care, in particular, of the law of the country in which the issuance of any class of preferred shares is carried out. (a) Subordinated preference or financing, or the own interposition of FVCs or subsidiaries, does not weaken the effectiveness of the requirements and limitations set out for those instruments or their value as the group's own resources; and may limit the computability of these instruments as resources in general The group's own computables in the light of these circumstances, without any discrimination.

6. In accordance with the second subparagraph of paragraph 1 (c) of Law 13/1985, the payment of the remuneration for the preference shares may be replaced, if the conditions of the issue so provide, by the delivery of shares. Ordinary, participative shares or contributions to the capital of credit unions, of the issuing or parent institution, provided that this allows the institution to preserve its financial resources.

This delivery of capital instruments will be admissible only if:

a) It gives rise to the same economic result as the cancellation, that is, if it does not imply reduction of the capital of the entity. It shall only be considered as giving rise to the same economic result as the cancellation, if the payment in kind is made with capital instruments issued to the effect and the issuer's obligation is limited to the issuance of such instruments, but does not exist a commitment on their part, or by some of the companies in their economic group, to find buyers for them or to assume any risks linked to the sale or value of the instruments delivered.

(b) The issuer has a total discretion not to pay the cash remuneration and, in addition, can cancel the delivery of the capital instruments where necessary, and especially when any of the instruments are triggered. (a) the arrangements for the absorption of losses referred to in paragraph 1 (i) of the second provision of Law 13/1985 of 25 May 1985. The Bank of Spain may require the cancellation of such delivery when the financial and solvency situation of the issuing or parent credit institution, or in the credit institution of its consolidated group or sub-group or that of the financial markets, advises it.

The Banco de España will develop the conditions for the application of the above limitations and may specify other conditions in which these payments may be acceptable.

7. In accordance with paragraph 1 (i) of the second provision of Law 13/1985, and without prejudice to the provisions of Article 70b of the Law 24/1988 of 28 July 1988 on the Securities Market, the conditions for the issuance of Preference shares shall establish a mechanism for the participation of their holders in the current or future losses of the issuing or dominant entity, which shall be clearly stated in those conditions.

The mechanism must take effect when any of the following circumstances occur:

(a) When the issuing or parent institution, or its consolidated group or sub-group, has a basic own resources ratio calculated in the same way as the solvency ratio, less than four per cent. For these purposes, the Banco de España may establish any other solvency ratio if it is more demanding.

(b) Where, having a core own resources ratio of less than six per cent, the issuing or parent institution, or its consolidated group or sub-group, presents significant accounting losses. Significant losses shall be taken to mean that cumulative losses for the last four quarters have been reduced by a third of the capital and previous reserves of the institution.

In the event that the mechanism is the conversion into ordinary shares, participative shares or contributions to the capital of the credit unions, of the credit institution or the parent, the latter shall permit the conversion immediate and have a swap relationship that establishes a floor to the number and nominal number of shares to be delivered.

When the mechanism is constituted by a reduction in the nominal value of the preferred shares, the losses incurred by the issuer as from the moment the mechanism takes effect will be divided between the its capital and reserves of one part and all of the preferred shares in circulation of another party, so that the nominal value of the latter assumes at least a permanent and non-recoverable reduction of 50% of which it affects, in proportion to their weight, the whole of capital and reserves.

The Banco de España may specify the terms of conversion of the preferred shares, in accordance with the criteria set out above, and the way to determine the losses and other indicators mentioned above, especially in the case of emissions guaranteed by different entities, on the basis that the aforementioned loss absorbing mechanisms do not undermine any recapitalisation processes.

8. When calculating the amount of its own resources, the Banco de España shall require credit institutions to apply the requirements in the valuation of its trading book to that of all its assets assessed at fair value, and deduct from the total of the elements of Article 12 (a), (b), (d) and (g), minus the elements of Article 13 (a) and (b), the amount corresponding to any additional adjustment of the value as necessary. '

Four. Article 15 (4) and (5) are worded as follows:

" 4. In any case, the ordinary capital and reserves, individual or consolidated, net of losses, intangible assets and own shares, and the representative units of minority interests that are eligible to be exceeded 50% the basic own resources of the credit institution or the consolidated group of credit institutions.

5. The Banco de España may authorise credit institutions and consolidable groups of credit institutions to compute as their own resources, temporarily and in emergency situations, the excess over the limits laid down in this Article and those established by the Banco de España in accordance with Article 14.2. '

Five. A paragraph 2a is added to Article 27, with the following wording:

" 2 bis. Where an external rating agency is registered as a credit rating agency in accordance with Regulation (EC) 1060/2009 of the European Parliament and of the Council of 16 September 2009 on rating agencies credit, the Banco de España will consider that the requirements of objectivity, independence, continuous review and transparency that are required of the applied methodology are met. "

Six. A new paragraph 6 is added to Article 32, with the following wording:

" 6. In any event, the minimum own funds requirements for credit risk calculated according to the internal ratings method as provided for in this Section may be subject to transitional minima as set out in this Section. the Banco de España in application of European Union law. "

Seven. Article 34 (9) is amended, which is worded as follows:

" 9. The Bank of Spain shall also determine the method of calculation of the risk-weighted exposure amounts and the expected losses to be used by credit institutions when exposures in the form of shares or units in institutions collective investment does not meet the criteria established by the Bank of Spain under the previous paragraph, the credit institution is not aware of all the underlying exposures of the collective investment institution or cannot reasonably be expected to have it or in cases where the credit institution assumes a burden undue examination of the underlying exposures in order to calculate those amounts in accordance with the methods set out in this Section. '

Eight. A new Article 40a is added to Section IV of Chapter III, with the following wording:

" Article 40a. Conditions for investment in securitisation positions.

1. For the purposes of Article sexto.3.d) of Law 13/1985 of 25 May, a credit institution other than originator, sponsor or original creditor may only be exposed to the credit risk of a securitisation position in its the trading book or out of it if the originator, sponsor or original creditor has explicitly disclosed to the credit institution that it is in a constant position to retain a significant net economic interest which, in Any case shall not be less than five per cent.

For the purposes of this Article, retention of a significant economic interest shall be understood:

(a) the retention of at least five percent of the nominal value of each of the tranches sold or transferred to investors;

(b) in the case of securitisations of renewable exposures, the retention of the originator's interest of 5% at least of the nominal value of the securitised exposures;

(c) the retention of randomly selected exposures, equivalent to at least five per cent of the nominal amount of the securitised exposures, where these exposures would otherwise have been securitised in the securitisation; provided that the number of potentially securitised exposures is not less than one hundred at the origin; or

(d) the retention of the first loss tranche and, if necessary, other fractions having a risk profile similar to or higher than those transferred or sold to investors and which do not sell in any way before the transferred or sold to investors, so that the retention amounts to a total of at least five per cent of the nominal value of the securitised exposures.

Net economic interest:

1. º will be determined by the theoretical value corresponding to the items in the order accounts;

2. is measured at source and will be maintained in a constant manner, that is, that for these purposes, retained positions, interests or exposures are not covered or sold; and

3. º shall not be subject to any credit risk reduction or any short position or any other coverage.

No multiple application of the retention requirements will be made for any securitisation.

The Bank of Spain may specify the conditions for applying this rule and the conditions set out in paragraph 2 below where the originator, sponsor or original creditor is a credit institution or an entity in your group. It shall also determine the way in which such institutions shall communicate to investors their retention, communication which should enable potential investors to easily access all relevant data on exposures.

2. Paragraph 1 shall not apply where the securitised exposures constitute contingent claims or credits against, or are fully, unconditionally and irrevocably guaranteed by:

(a) central governments or central banks;

(b) regional administrations, local authorities and public sector entities in the Member States;

(c) institutions to which a risk weight of fifty per cent or less is assigned in accordance with the provisions of Section 1 of this royal decree;

d) multilateral development banks.

The provisions of paragraph 1 shall not apply to:

(a) transactions based on a clear, transparent and accessible index, where the underlying reference entities are identical to those that produce a widely traded entity index, or are marketable securities different from the securitisation positions, or

b) syndicated loans, receivables or credit default swaps, provided that such instruments are not used to "convert" or cover securitisations that fall within the scope of the paragraph 1.

3. The Banco de España may decide to temporarily suspend the requirements referred to in paragraph 1 during periods of general liquidity crisis on the market. '

Nine. A new Article 40b is added, with the following wording:

" Article 40b. Monitoring and reporting obligations of institutions investing in securitisation positions.

Before investing, and thereafter when the Bank of Spain requires it, credit institutions must be able to demonstrate to the Banco de España, in respect of each of its securitisation positions, that they are aware of them, in their all and all of its details, and which have applied the formal policies and procedures appropriate to their trading book and their operations outside it, in proportion to the risk profile of their investments in securitised positions. The Bank of Spain shall determine the minimum elements which, in order to comply with this obligation, institutions must examine and record, including in any case stress tests, and the manner in which they must comply with the provisions of this Article.

Similarly, credit institutions other than originators, sponsors or original creditors shall establish formal procedures appropriate to their trading book and to their operations outside of it and in proportion to the risk profile of their investments in securitised positions in order to ensure continuous and timely monitoring of the developments in the underlying exposures to their securitisation positions and to hold a deep knowledge of all the structural features of a transaction securitisation which may have material effect on the performance of its exposures to the transaction. The Bank of Spain shall detail the content of this obligation. "

Ten. A new Article 40c is added, with the following wording:

" Article 40c. Obligations of originator and sponsor entities with respect to securitisation positions.

1. Originator and sponsor credit institutions shall apply to exposures that are to be securitised the same solid and well-defined criteria for the granting and management of claims that they apply to the exposures to be held in their portfolio, in accordance with the technical criteria for the organisation and treatment of the risk to be established by the Banco de España.

2. Originator and sponsor credit institutions shall communicate to investors the level of their commitment, in accordance with Article 40a (1), to maintain a net economic interest in the securitisation. Originator and sponsor credit institutions shall ensure that potential investors are able to easily access all relevant data in the terms provided for by the Banco de España. '

Once. A new Article 40d is added, with the following wording:

" Article 40 quinquies. Consequence of non-compliance with the obligations in respect of securitisation positions.

On the assumption that a credit institution does not satisfy any substantial aspect of the obligations referred to in the first paragraph of Article 40b, or the reporting obligations of its retention commitment, in accordance with Article 40 (2) (2), the risk weight of its exposures in securitisation shall be increased, in respect of which it is generally established in this royal decree. The Bank of Spain will determine the scope of this increase and how to apply it.

In the event that due diligence conditions established by the Bank of Spain are not met, in accordance with Article 40 quater.1, the originator credit institution shall not apply the provisions of Article 42.1, and this originator credit institution may not exclude the securitised exposures in the calculation of its capital requirements in accordance with this Royal Decree. '

Twelve. Article 42 (2) is amended as follows:

" 2. For the purposes of paragraph 1, the effectiveness of the transmission of credit risk shall require that the legal instruments used are valid in all relevant jurisdictions, that the contractual clauses, as is the case of the options for extinction or early repayment, do not question the transfer of the risks and the originator or sponsor does not provide the securitisation with support beyond its contractual obligation, or any other improvements it has to reduce potential or actual losses for investors.

originator or sponsor credit institutions that have sold instruments from their trading book to a securitisations institution, so that they are no longer required to have their own funds in front of the risks of such instruments shall also not provide the securitisation with support beyond its contractual obligation in order to reduce potential or actual losses for investors. '

Thirteen. A paragraph 3a is added to Article 44, with the following wording:

" 3 bis. Where an external rating agency is registered as a credit rating agency in accordance with Regulation (EC) 1060/2009 of the European Parliament and of the Council of 16 September 2009 on rating agencies The Bank of Spain shall consider that the requirements of objectivity, independence, continuous review and transparency in its assessment method referred to in Article 27 are met. '

Fourteen. A new paragraph 6 is added to Article 62, with the following wording:

" 6. In any event, the minimum requirements for own funds for operational risk calculated according to advanced measurement methods may be subject to transitional soils in accordance with the provisions of the Bank of Spain under the law of the European Union. "

Fifteen. Article 63 is amended as follows:

" Article 63. Limits to the big risks.

1. A person, entity or economic group, including the non-consolidated party itself, shall be regarded as a major risk when its value exceeds 10% of the own resources of the credit institution granting the credit institution. funding or take the risk.

2. The value of all the risks that a credit institution contracts with a single person, entity or foreign economic group may not exceed 25% of its own resources, after taking into account the reduction of credit risk in accordance with Section 3 of Chapter III of Title I.

When that customer is a credit institution or an investment firm, or where the economic group includes one or more credit institutions or investment firms, that value shall not exceed 25% of the total own resources of the credit institution or EUR 150 million, if this amount is higher, provided that the sum of the securities of the exposures to all the clients of the economic group other than credit institutions or undertakings of investment services, after taking into account the effect of the reduction in credit risk of Section 3 of Title I, Chapter III, does not exceed 25% of the credit institution's own resources.

When the amount of 150 million euros is greater than twenty-five percent of the credit institution's own resources, according to the policies and procedures to manage and control the risk of concentration, it shall establish a reasonable limit, in terms of its own resources, to the value of the exposure, after taking into account the effect of the reduction of the credit risk in accordance with Section 3 of Chapter III of the Title I. This limit shall not exceed one hundred per cent of the credit institution's own resources.

3. For the purposes of compliance with this Chapter, credit institutions shall:

(a) They shall carry out appropriate monitoring of the concentration of their risks through safe administrative and accounting procedures and appropriate internal control mechanisms. These means shall enable the above mentioned entities to identify and record all major risk operations and the changes to them, as well as to monitor their exposures, taking into account the policy of the credit institution in risk material and pay particular attention to the relationships of participation, cross-guarantees and relationships of commercial dependence between its clients.

(b) For the purposes of the limits laid down in paragraph 2 of this Article, they shall accrue to the risks held against a single person or economic group which are held against natural or legal persons who, because they are (a) the economic and financial interests of the parties concerned may be found in serious difficulties to meet their commitments if the person or economic group with whom they are interlinked will be in a situation of insolvency or lack of liquidity. The Bank of Spain will be responsible for monitoring compliance with this letter and may establish that certain sets of clients are considered as a unit for the purposes of the application of those limits, even if they do not belong to the same economic group.

4. The Bank of Spain may allow the application of the reference limits on an individual basis, or shall be added to only certain components of an economic group where its autonomy of management, limitation of liability or specific activity is advise.

5. The Bank of Spain shall regulate the system of notification of major risks, as defined in paragraph 1

6. The Bank of Spain shall determine how the risks for the calculation of the limits set out in this Article, including rules relating to exposures at credit risk, risks arising from the portfolio of the portfolio, should be added. trading, positions in securitisation funds, investment companies or funds or similar vehicles, and risks with multi-group companies. '

Sixteen. Article 64 is amended as follows:

" 1. They shall not be subject to the limitations set out in paragraph 2 of the previous Article:

(a) The risks incurred in relation to the General Administration of the State and the Bank of Spain; vis-à-vis the Autonomous Communities and the local authorities for the acquisition of public debt issued by them; vis-à-vis the Union European, and vis-à-vis central governments and central banks in other countries or in the face of multilateral development banks, provided that all of them receive, without guarantee, a 0% weighting according to the standard method referred to in Chapter III.

(b) The risks with direct and unconditional guarantee of the subjects referred to in the previous paragraph except for the autonomous communities and local entities.

b) The risks incurred or sufficiently secured by the regional authorities or local authorities of the Member States, provided that they receive, without guarantee, a 0% weighting according to the standard method referred to in Chapter III.

c) 50% of the risks to local Spanish entities, and to the autonomous communities, as soon as they have not already been excluded as set out in the preceding letter, as well as 50% of the risks guaranteed by those Administrations directly and unconditionally.

(d) The risks secured with cash deposit, or certificates of deposit, in the lending institution itself or in others of its consolidable group.

e) All assets and other items deducted from own resources.

(f) Home mortgage collateral loans, provided that they meet the requirements of the mortgage market regulatory legislation, and the risks arising from leasing transactions under of which the entity retains full ownership of the rented accommodation while the lessee has not exercised its option to purchase, in both cases, up to 50% of the value of the exposure.

g) Total or in part, those other assets, commitments and order accounts at risk of credit that, in consideration of their personal or real guarantees and other exempted or extenuating circumstances, in particular their weight below 100% for credit risk purposes, establish the Banco de España.

2. The Bank of Spain may regulate the conditions under which the risk to a customer shall be attributed, or may be attributed by the institution, to third parties which guarantee it directly and unconditionally or to issuers of the securities issued in its warranty.

3. The Bank of Spain may also exempt from the limits on the concentration of risks laid down in Article 63 the disposals of funds by credit institutions for the systematic channelling of resources to the interbank market. through another intermediary credit institution, in the framework of an agreement approved by the Banco de España itself. "

seventeen. A second paragraph is added to Article 66.4, with the following wording:

" In particular, the Banco de España will periodically carry out an assessment of the overall liquidity risk management of credit institutions and promote the development of sound internal methodologies. In its evaluations, the Banco de España will take into account the role played by credit institutions in the financial markets. The Bank of Spain shall detail the form and procedure with which it shall carry out such periodic assessment. '

Eighteen. Paragraph (h) of Article 67 is amended, which is worded as follows:

" h) Risk of liquidity:

1. The establishment of strategies, policies and procedures and robust systems for the identification, measurement, management and monitoring of liquidity risk on an appropriate set of time horizons, including the intraday, in order to ensure that credit institutions maintain an appropriate level of liquidity. Such strategies, policies, procedures and systems shall be in line with business lines, currencies and entities and shall include appropriate mechanisms for the allocation of liquidity costs, benefits and risks.

Credit institutions will study different liquidity risk mitigation tools, in particular a system of limits and liquidity reserves that will allow for a variety of stress situations, and a structure of financing and access to adequately diversified sources of finance. These measures shall be subject to regular review.

Alternative scenarios will be considered and the assumptions on which decisions regarding the net funding position are based will be reviewed periodically.

Credit institutions will analyze the potential effects of alternative scenarios, either circumscribed to the entity itself, or extended to the entire market or a combination of both. Different time horizons and conditions with varying degrees of tension shall be taken into consideration.

2. The credit institutions shall adjust their strategies, internal policies and limits in relation to liquidity risk and develop effective emergency plans, taking into account the results of alternative scenarios that "

nineteen. A new Article 72a is inserted, with the following text:

" Article 72a. Imposition of additional requirements by the Banco de España.

1. For the purposes of determining the appropriate level of own resources in accordance with Article 10 (1) (c) and Article 11 (3) (a) of Law 13/1985 of 25 May, the Banco de España shall assess whether a requirement of a own resources additional to those required at least in order to cover the risks to which a credit institution and its consolidated group may be or may be exposed, taking into account the following:

(a) the quantitative and qualitative aspects of the process of assessment of the entities referred to in Article 6.4 of Law 13/1985, of 25 May,

(b) the systems, procedures and mechanisms of the entities referred to in Article 30b (1) (a) of Law 26/1988 of 29 July.

(c) the results of the supervision and evaluation carried out in accordance with Article 10 (1) (c) of Law 13/1985 of 25 May. "

Twenty. A new Chapter XII is added to Title I:

" CHAPTER XII

Provisions regarding the declaration of branches as significant and the establishment of colleges of supervisors

Article 76a. A procedure for the declaration of branches as significant and information obligations of the Banco de España in this respect.

1. For branches of Spanish credit institutions established in another Member State, the Banco de España:

(a) Promote the process of adopting a joint decision on its designation as significant within the maximum period of 2 months from the receipt of the application referred to in Article 10a (2) (g) of Law 13/1985, May 25. In the event of no joint decision being taken, the Banco de España shall recognise and implement the decision taken by the competent authority of the host Member State.

(b) Communicate to the competent authorities of the Member State in which a significant branch of a Spanish credit institution is established the information referred to in Article 6.1 (c) and (d) of the Royal Decree Parliament adopted a resolution on the implementation of the law of the European Communities on the application of the law of the European Communities to the Council of the European Communities on the application of the laws of the Member States relating to: investment ratios, own resources and reporting obligations of the financial intermediaries in cooperation with the competent authorities of the Member State in which the branch operates.

The Bank of Spain shall also inform the Spanish credit institution of the decision taken by the competent authority of the host Member State.

2. For branches in Spain of a foreign credit institution domiciled in the European Union, the Banco de España may request the competent supervisory authorities to initiate appropriate actions to recognise the nature of the significant of that branch and, where appropriate, to resolve, on such an extreme. To this end, if, within two months of receipt of the request made by the Bank of Spain, a joint decision is not reached with the supervisor of the home Member State, the Banco de España shall have an additional period of two years. months to make your own decision.

3. In the actions referred to in paragraph 2 and subparagraph (a) of paragraph 1 above, the Bank of Spain shall:

(a) shall take into account the views and reservations expressed by the competent authority of the Member States concerned, where appropriate;

(b) shall consider items such as the market share of the branch in terms of deposits; the likely impact of the suspension or cessation of the credit institution's operations on the market liquidity and on the payment systems, and clearing and settlement; and the size and importance of the branch by number of customers.

Such decisions shall be translated into a document containing the decision and its statement of reasons and shall be notified to the other competent authorities and to the entity concerned.

Article 76 ter. Rules of operation of colleges of credit institution supervisors.

1. The competent authorities responsible for the supervision of subsidiaries of a parent credit institution of the European Union may participate in the colleges of supervisors referred to in Article 10c of Law 13/1985 of 25 May. or a parent financial holding company of the European Union, and the competent authorities of the Member State in which significant branches are established, central banks where appropriate, as well as, where appropriate, competent authorities of third countries, subject to confidentiality requirements which are equivalent, in the case of all competent authorities, as provided for in Article 6 of the Royal Legislative Decree 1298/1986 of 28 June.

2. The Bank of Spain, when it is appropriate to establish a college of supervisors in accordance with the provisions of Article 10c of Law 13/1985, of 25 May:

(a) The competent authorities participating in a meeting or in an activity of the college of supervisors shall decide. In this respect, the decision of the Banco de España shall take into account the importance of the supervisory activity to be planned or coordinated, in particular assessing its potential impact on the stability of the financial system of the Member States. affected members, in particular in emergency situations. In addition, it will also assess the reporting obligations for branches deemed to be significant.

(b) It shall keep all members of the college fully informed, at the appropriate time, of the decisions agreed at the meetings of the college of supervisors or of the measures taken.

(c) Report to the European Banking Authority, subject to the confidentiality requirements laid down in Article 6 of Royal Decree 1298/1986 of 28 June 1986, on the activities of the college of supervisors, especially those developed in emergency situations, and shall communicate to that authority any information that is of particular interest for the purpose of the convergence of supervisory activity. '

Twenty-one. A new Chapter XIII is added to Title I.

" CHAPTER XIII

Credit institutions remuneration policy

Article 76 quater. Scope of application.

Credit institutions should apply the requirements of this chapter to categories of employees whose professional activities have a significant impact on their risk profile, at group level, company level, parent and subsidiary.

Article 76 quinquies. Requirements of the remuneration policy.

1. In accordance with Article 10a of Law 13/1985 of 25 May 1985 on investment ratios, own resources and information obligations of financial intermediaries and other financial system rules, when fixing and applying the 'global remuneration policy', including salaries and discretionary pension benefits, of the categories of employees whose professional activities have a significant impact on their risk profile, credit institutions, as to its internal organisation and in a manner proportional to its size, nature, scope and complexity of your activities, meet the following requirements:

(a) credit institutions shall submit to the Banco de España a list indicating the categories of employees whose professional activities have a significant impact on their risk profile;

(b) the remuneration policy shall be compatible with adequate and effective risk management, shall promote such management and shall not provide incentives to take risks that exceed the level of risk tolerated by the institution of credit;

(c) the remuneration policy shall be compatible with the business strategy, objectives, values and long-term interests of the credit institution and shall include measures to avoid conflicts of interest;

(d) the management body of the credit institution shall establish and ensure the application of the general principles of the remuneration policy, regularly reviewing them;

(e) at least once a year, a central and independent internal evaluation of the application of the remuneration policy shall be made in order to verify whether the remuneration guidelines and procedures adopted by the Commission are met. management body in its supervisory function;

(f) personnel carrying out control functions within the credit institution shall be independent of the business units they supervise, shall have the necessary authority and shall be remunerated in the light of the achievement of the objectives related to their functions, regardless of the results of the business areas it controls;

(g) the remuneration of senior managers in charge of risk management and compliance functions shall be directly supervised by the remuneration committee referred to in paragraph 2 of this Article or, if not have been set up by the management body in its supervisory role;

h) staff shall be required to undertake not to use personal hedging or insurance strategies related to remuneration and liability, which detract from the effects of the alignment with the risk included in their remuneration systems.

1. The early termination payments of a contract will be based on the results obtained over time and will be established in a way that does not reward bad results;

2. The pension policy shall be compatible with the business strategy, objectives, values and long-term interests of the credit institution and if the employee leaves the credit institution before retirement, the (a) credit institution shall have in its possession the discretionary pension benefits for a period of five years in the form of instruments such as those referred to in point (g) of the second paragraph of Article 76e. If an employee reaches the retirement age, he or she shall be paid the discretionary pension benefits in the form of instruments such as those referred to in point (g) of the second paragraph of Article 76e, subject to a retention period of five years. years;

For the purposes of this Article, discretionary pension benefits, discretionary payments granted by a credit institution to an employee on an individual basis, made with reference to retirement, and which can be assimilated to variable remuneration. In no case shall it include benefits granted to an employee in accordance with the institution's pension system.

2. The Banco de España will determine, in view of its size, its internal organization, the nature, the scope or the complexity of its activities, the credit institutions that will have to establish a remuneration committee. The remuneration committee shall have a composition that enables it to exercise effective and independent control of remuneration policies and practices and the incentives created to manage risk, capital and liquidity.

The remuneration committee shall be responsible for the preparation of the remuneration decisions, including those which have an impact on the risk and risk management of the credit institution concerned and which the management body must be adopted in its supervisory role. The President and the members of the remuneration committee shall be members of the management body that do not perform executive functions in the credit institution concerned. When preparing decisions, the remuneration committee shall take into account the long-term interests of shareholders, investors and other stakeholders in the credit institution.

In the case of the Savings Banks, a commission of remuneration and appointments shall be established in accordance with the provisions of Law 31/1985 of 2 August of Regulation of Basic Standards on Governing Bodies of the Banks of Savings that will hold the competencies and functions of the remuneration committee referred to in this section.

Article 76 sexies. Design of the compensation schemes.

1. The design of the remuneration schemes by the credit institutions must present a balanced and efficient relationship between the fixed components and the variable components such that the fixed component constitutes a sufficiently large part of the total remuneration. The variable components of the remuneration must have sufficient flexibility to allow their modulation to the extent that the variable remuneration can be completely abolished.

Credit institutions shall establish the appropriate relationship between the fixed components and the variables of the total remuneration. For these purposes, the Banco de España may establish specific criteria for the determination of that relationship.

2. The variable components of remuneration should create incentives that meet the long-term interests of the entity and meet the following requirements:

(a) Where the remuneration is linked to the results, the total amount of the remuneration shall be based on an assessment combining the employee's results, measured on the basis of both financial and non-financial criteria, of the the affected business unit and the overall results of the credit institution.

(b) The assessment of the results will be entered into a multi-annual framework to ensure that the assessment process is based on long-term results and takes into account the underlying economic cycle of the credit institution. and its business risks.

(c) The total variable remuneration shall not limit the credit institution's ability to strengthen the soundness of its capital base.

(d) The guaranteed variable remuneration shall be exceptional and may only be applied to the first year of employment of the new staff.

e) When assessing the results for the purpose of calculating the variable components of the remuneration or the funds to pay for these components, an adjustment shall be made for all types of current and future risks, and shall be taken into account the cost of capital and the liquidity required.

f) The allocation of variable remuneration components in the credit institution shall also take into account all current and future risk types.

g) A substantial part, and in any case at least 50% of any variable remuneration element, whether deferred in accordance with point (h) of this article or not deferred, shall be established by reaching an appropriate balance between:

1. equivalent property shares or interests, depending on the legal structure of the institution concerned, or instruments linked to the shares or other equivalent non-pecuniary instruments, in the case of a credit institution that does not cotice in an official organised market; and

2. where applicable, other instruments, which may be determined by the Banco de España, that adequately reflect the credit rating of the credit institution in a normal situation.

The instruments referred to in this paragraph shall be subject to an appropriate retention policy designed to ensure that the incentives are in line with the long-term interest of the credit institution. The Banco de España may impose restrictions on the design or types of these instruments and even prohibit some of them.

(h) A substantial part, and in any case at least 40% of the variable remuneration element, shall be deferred for a period to be determined taking into account the economic cycle, the nature of the business, its risks and the activities of the employee in question and which shall in no case be less than three years.

In case the amount of the variable remuneration exceeds the average amount of the variable remuneration in the sector in a particularly significant way, at least 60% of the payment of the variable remuneration shall be deferred.

Deferred remuneration payments may not occur more quickly than if they were distributed proportionally in the deferred period.

(i) the variable remuneration, including the deferred part, shall be paid only if it is sustainable in accordance with the situation of the credit institution as a whole, and if it is justified on the basis of the results of that institution, of the business unit and the employee concerned.

(j) variable remuneration shall not be paid by means of instruments or methods to evade the requirements set out in this royal decree. For these purposes, the Banco de España may:

1. impose restrictions on credit institutions for the use of the instruments mentioned in this article;

2. º set the criteria necessary to allow variable remuneration to be contracted according to the negative financial results of credit institutions;

3. require credit institutions and their groups to limit variable remuneration as a percentage of total net income when this is not compatible with the maintenance of a solid capital base.

Article 76 septies. Credit institutions receiving financial support.

1. The remuneration schemes of credit institutions that receive public financial support for restructuring or consolidation shall comply with the following requirements in addition to the following requirements:

(a) When variable remuneration is incompatible with the maintenance of a sound capital base and with a timely waiver of public support, it will be strictly limited to a percentage of net income.

(b) Managers and managers who effectively direct the activity of the institution shall not receive variable remuneration unless justified, in the opinion of the Banco de España. The Banco de España may also establish, where appropriate, limits to its total remuneration. "

Twenty-two. Article 88 (1), which is worded as follows, is amended as follows:

" 1. The own resources of the investment firm's own resources shall be made up of

following elements:

(a) The share capital, excluding the share of the capital referred to in point (e) below, plus the corresponding emission premium account, to the extent that it fully serves to absorb losses in normal situations and, in case of competition, have lower ranking than all other credits.

b) Effective and express reservations.

During the financial year and, at the end of the year, until the implementation of the results is carried out, investment firms may incorporate into this element the share of the results that are expected to be applied to reserves. which:

1. º Exist a formal commitment to the application of results by the entity's management body.

2. The accounts in which such results are reflected have been verified with a favorable report by the entity's external auditors.

3. To be credited, to the satisfaction of the National Securities Market Commission, which the party to incorporate is free of any foreseeable burden, especially for tax and dividend taxes.

(c) The reserves of regularization, updating or revaluation of assets, after verification by the National Securities Market Commission of the correction of its calculation and its submission to accounting standards.

Reserves of this nature associated with merger processes shall not be counted as own resources prior to the registration of the merger in the Mercantile Register, subtracting from the revalued assets for the purposes of the calculation of the own resources requirements.

(d) The funds affected to the institution's risk pool, the allocation of which has been made separately within the profit or loss account, and provided that its amount is shown separately in the public balance sheet of the entity.

e) The share of the share capital corresponding to the shares without voting in the second section of Chapter II of Title IV of the Royal Legislative Decree 1/2010 of 2 July, approving the recast text of the Capital Companies Act.

and (a) The preferred shares issued that meet the requirements laid down in the second provision of Law 13/1985, of 25 May, and in Article 14 of this Royal Decree, paragraphs 2, 6 and 7.

For the purposes of this letter, the statements made in those provisions to the Banco de España and to the credit institutions shall be read, respectively, to the National Securities and Exchange Commission and to the investment services.

(f) Subordinated financing received by the investment firm that meets the requirements set out in Article 90.2.

(g) Finances of indeterminate duration which, in addition to the conditions required for subordinated financing, provide that the debt and interest payable may be applied to absorb the losses of the entity without the need for dissolution.

For inclusion among own resources, the items listed in points (a), (e), (e), (f) and (g) shall be computed on the part that is effectively disbursed. "

Twenty-three. The second subparagraph of Article 91 (1) shall be read as

:

" The basic own resources of an investment firm shall consist of the sum of the items referred to in Article 88,1 (a), (b), (d) and (a), minus the amount of the concept of Article 89,1 (a) and the items included in concepts (b), (c) and (d) of this last paragraph relating to those items. '

Twenty-four. Article 94 (5) is worded as follows:

" 5. By way of derogation from paragraph 1 above, the National Securities Market Commission may, upon request, authorise securities agencies and holding companies to maintain own resources equal to or higher than the largest of the following amounts:

(a) The sum of the requirements referred to in the numbers 1, 2, 2 and 3. of this article.

b) The fourth part of the structure expenses of the preceding year.

c) 5 per thousand of the volume of the managed portfolios.

(d) Two-thirds of the minimum capital required for the establishment of the type of investment services undertaking concerned. "

Twenty-five. A new paragraph 1a is inserted in Article 95, with the following wording:

" 1 bis. Notwithstanding the foregoing, institutions which comply with the criteria laid down in Article 94.4 (a) and (b) or with the provisions laid down in Article 94.5 shall be exempted from the fulfilment of the obligations laid down in Article 56. paragraphs (a), (b) and (c). '

Twenty-six. Article 107a is inserted with the following wording:

" Article 107a. Branch statement procedure as significant and reporting obligations of the National Securities Market Commission in this respect.

1. For branches of Spanish investment services established in another Member State, the National Securities Market Commission:

(a) Promote the process of adopting a joint decision on its designation as significant within the maximum period of 2 months from the receipt of the application to which it refers to 91 quinquies of Law 24/1988 of 28 July, of the Stock Market. In the event of no joint decision being taken, the National Securities Market Commission shall recognise and implement the decision taken in this respect by the competent authority of the host Member State.

(b) It shall communicate to the competent authorities of the Member State in which a significant branch of a Spanish investment firm is established the information referred to in Article 91a (8), (c) and (d) of Law 24/1988 of 28 July 1988 on the Stock Market and shall carry out the tasks referred to in Article 108.1 (c) of this Royal Decree in collaboration with the competent authorities of the Member State in which the the branch operates.

The National Securities Market Commission shall also communicate to the Spanish investment firm the decision taken in this respect by the competent authority of the host Member State.

2. With regard to branches in Spain of a foreign investment firm domiciled in the European Union, the National Securities Market Commission may request the competent supervisory authorities to initiate proceedings. appropriate to recognise the significant nature of such a branch and, where appropriate, to resolve, on such an extreme. To this end, if, within two months of the receipt of the request made by the National Securities Market Commission, a joint decision is not reached with the supervisor of the home Member State, the National Market Commission You will have an additional period of two months to make your own decision.

3. In the actions referred to in the preceding paragraph and point (a) of paragraph 1 above, the National Securities Market Commission shall:

(a) shall take into account the views and reservations expressed by the competent authority of the Member States concerned, where appropriate;

(b) should consider items such as the market share of the branch in terms of managed financial instruments; the likely impact of the suspension or cessation of the operations of the investment firm in the liquidity of the market and in the liquidity and payment systems, and in clearing and settlement; and the size and importance of the branch by number of customers.

Such decisions shall be translated into a document containing the decision and its statement of reasons and shall be notified to the other competent authorities and to the entity concerned. "

Twenty-seven. Article 107b is added, with the following wording:

" Article 107 ter. Rules of operation of colleges of supervisors of investment services firms.

1. In the colleges of supervisors referred to in Article 91 (f) of the Law 24/1988 of 28 July 1988 on the Securities Market, the competent authorities responsible for the supervision of the subsidiaries of a service undertaking may participate. the parent investment of the European Union or a parent financial holding company of the European Union, and the competent authorities of the Member State in which significant branches are established, central banks where appropriate, and, if the competent authorities of third countries, subject to confidentiality requirements which are equivalent, in the opinion of all the competent authorities, to the requirements laid down in Article 90 of the Law 24/1988 of 28 July 1988 on the Stock Market.

2. The National Securities Market Commission, when it is appropriate to establish a college of supervisors in accordance with the provisions of Article 91 septies of Law 24/1988 of 28 July of the Stock Market:

(a) The competent authorities participating in a meeting or in an activity of the college of supervisors shall decide. In this respect, the decision of the National Securities Market Commission shall take into account the relevance of the supervisory activity to be planned or coordinated, in particular assessing its potential impact on the stability of the system. the financial situation of the Member States concerned, in particular in emergency situations. Additionally, it will also value the reporting obligations for branches deemed to be significant.

(b) It shall keep all members of the college fully informed, at the appropriate time, of the measures taken at the meetings of the college of supervisors or of the measures taken.

(c) It shall inform the European Securities and Markets Authority, subject to the confidentiality requirements laid down in Article 90 of the Law 24/1988 of 28 July, of the Securities Market, of the activities of the college of supervisors, especially those developed in emergency situations, and shall communicate to that authority any information that is of particular interest for the purpose of the convergence of supervisory activity. '

Twenty-eight. Article 108 (1) is hereby worded as

:

" 1. It shall be the responsibility of the National Securities Market Commission, in its capacity as the authority responsible for the exercise of the consolidated supervision of the parent investment firms of the European Union and of the service undertakings of investment controlled by the parent financial holding companies of the European Union, and in relation to the supervisory authorities of the European Union:

a) Coordinate the collection of information and disseminate among the other authorities responsible for the supervision of entities in the group information that it considers important in both normal and urgent situations.

b) Plan and coordinate supervisory activities in normal situations, in relation to the activities referred to in Article 103 (1) and (2) of this Royal Decree and Chapter VI of this Title, in Article 87a (1) and (3) of Law 24/1988 of 28 July 1988 on the Stock Market and the provisions relating to technical criteria concerning the organisation and treatment of risks in collaboration with the authorities competent authorities.

c) Plan and coordinate supervisory activities, in collaboration with the competent authorities involved and, where appropriate, with central banks, in urgent situations or in anticipation of such situations, in an adverse development of credit institutions or financial markets, where possible, where possible, from existing specific channels of communication to facilitate crisis management.

The planning and coordination of the supervisory activities referred to in paragraph (c) shall include the exceptional measures referred to in Article 91 bis.8.d of the Law 24/1988 of 28 July of the Securities Market, the development of joint assessments, implementation of emergency plans and communication to the public.

d) In accordance with the provisions of Article 91a of Law 24/1988 of 28 July 1988 on the Securities Market, enter into coordination and cooperation agreements with other competent authorities which are intended to facilitate and establish effective monitoring of the groups entrusted to their supervision and take on the additional tasks resulting from such agreements.

In particular, and as provided for in Article 85.1 (b) of the Law 24/1988, of 28 July, of the Securities Market, the National Securities Market Commission, when it is responsible for the authorization of the subsidiary of a company investment services may delegate their supervisory responsibility to the competent authorities which have authorised and supervise the parent undertaking, in order to ensure that they are responsible for the supervision of the subsidiary in accordance with the provisions of this Directive; decree. The European Commission should be kept informed of the existence and content of such agreements.

(e) To warn the Minister for Economic Affairs and Finance, as soon as possible, and the other supervisory authorities, nationals or foreigners, of the emergence of a situation of urgency, in particular of a adverse developments in financial markets, which may compromise liquidity in the market and the stability of the financial system of any Member State of the European Union in which entities of a group or in which they are authorised have been authorised established significant branches as referred to in Article 9d of the Law 24/1988, of July 28, of the Stock Market.

In these assumptions, when the National Securities Market Commission needs information that has already been provided to another competent authority, it will contact it whenever possible, to prevent it from being double the reports of the different authorities involved in the supervision. "

Twenty-nine. A new Chapter VIII is added to Title II:

" CHAPTER VIII

Investment services companies ' remuneration policy

Article 115. Scope of application.

Investment services companies should apply the requirements of this chapter to the categories of employees whose professional activities have a significant impact on their risk profile, at group level, parent and subsidiary company.

Article 116. Requirements of the remuneration policy.

1. In accordance with the provisions of Article 70 bis.1 of the Law 24/1988 of 28 July 1988 on the Stock Market, when fixing and applying the policy of global remuneration, including salaries and discretionary pension benefits, of the categories of employees whose professional activities have a significant impact on their risk profile, investment firms, in accordance with their internal organisation and in proportion to their size, nature, extent and complexity their activities, shall meet the following requirements:

(a) investment firms shall submit to the National Securities and Exchange Commission a list indicating the categories of employees whose professional activities have a significant impact on their business profile; risk;

b) the remuneration policy will be compatible with adequate and effective risk management, will promote this type of management and will not provide incentives to take risks that exceed the level of risk tolerated by the company investment services;

(c) the remuneration policy shall be compatible with the business strategy, objectives, values and long-term interests of the investment firm and shall include measures to prevent conflicts of interests;

(d) the management body of the investment firm shall establish and ensure the application of the general principles of the remuneration policy, regularly reviewing them;

(e) at least once a year, a central and independent internal evaluation of the application of the remuneration policy shall be made in order to verify whether the remuneration guidelines and procedures adopted by the Commission are met. management body in its supervisory function;

(f) personnel carrying out control functions within the investment firm shall be independent of the business units it supervises, shall have the necessary authority and shall be remunerated on the basis of the achievement of the objectives related to its tasks, regardless of the results of the business areas it controls;

(g) the remuneration of senior managers in charge of risk management and compliance functions shall be directly supervised by the remuneration committee referred to in paragraph 2 of this Article or, if not have been set up by the management body in its supervisory role;

h) staff shall be required to undertake not to use personal hedging or insurance strategies related to remuneration and liability, which detract from the effects of the alignment with the risk included in their remuneration systems;

i) payments for early termination of a contract shall be based on the results obtained over time and shall be established in such a way that they do not reward bad results;

j) The pension policy shall be compatible with the business strategy, objectives, values and long-term interests of the investment firm and if the employee leaves the investment firm prior to retirement, the investment firm shall be entitled to the discretionary pension benefits for a period of five years in the form of instruments such as those referred to in Article 117.2.g. If an employee reaches the retirement age, he or she will be paid the discretionary pension benefits in the form of instruments such as those mentioned in Article 117.2.g), subject to a retention period of five years.

For the purposes of this Article, discretionary pension benefits, discretionary payments granted by an investment firm to an employee on an individual basis, made with reference to the retirement and which can be assimilated to variable remuneration. In no case shall it include benefits granted to an employee in accordance with the institution's pension system.

2. The National Securities Market Commission shall determine, by reason of its size, its internal organisation, the nature, extent or complexity of its activities, the investment firms which shall establish a committee of Remuneration. The remuneration committee shall have a composition that enables it to exercise effective and independent control of remuneration policies and practices and the incentives created to manage risk, capital and liquidity.

The remuneration committee shall be responsible for the preparation of the remuneration decisions, including those that have an impact on the risk and risk management of the investment firm that the management body must be adopted in its supervisory role. The Chairman and the members of the remuneration committee shall be members of the management body that do not perform executive functions in the investment firm concerned. When preparing the decisions, the remuneration committee shall take into account the long-term interests of the shareholders, investors and other stakeholders in the investment firm.

Article 117. Design of the compensation schemes.

1. The design of the remuneration schemes should present a balanced and efficient relationship between the fixed components and the variable components such that the fixed component constitutes a sufficiently high part of the total remuneration. The variable components of the remuneration must have sufficient flexibility to allow their modulation to the extent that the variable remuneration can be completely abolished.

Investment services companies shall establish the appropriate relationship between fixed components and the variables of total remuneration. For these purposes, the National Securities Market Commission may establish specific criteria for the determination of that relationship.

2. The variable components of the remuneration should create incentives that are in line with the entity's long-term interest and meet the following requirements:

(a) Where the remuneration is linked to the results, the total amount of the remuneration shall be based on an assessment combining the employee's results, measured on the basis of both financial and non-financial criteria, of the the affected business unit and the overall results of the investment services company.

(b) The assessment of the results will be entered into a multi-annual framework to ensure that the assessment process is based on long-term results and takes into account the underlying business cycle of the investment services and their business risks.

(c) The total variable remuneration shall not limit the capacity of the investment firm to strengthen the soundness of its capital base.

(d) The guaranteed variable remuneration shall be exceptional and may only be applied to the first year of employment of the new staff.

e) When assessing the results for the purpose of calculating the variable components of the remuneration or the funds to pay for these components, an adjustment shall be made for all types of current and future risks, and shall be taken into account the cost of capital and the liquidity required.

f) The allocation of variable remuneration components in the investment firm shall also take into account all current and future types of risks.

g) A substantial part, and in any case at least 50% of any variable remuneration element, whether deferred in accordance with point (h) of this article or not deferred, shall be established by reaching an appropriate balance between:

1.) equivalent shares or interests, depending on the legal structure of the institution concerned, or instruments linked to the shares or other equivalent non-pecuniary instruments, in the case of a an investment firm that does not take part in an official organised market; and,

2. (º) where applicable, other instruments, which may be determined by the National Securities Market Commission, that adequately reflect the credit rating of the investment services company in a normal situation.

The instruments referred to in this paragraph will be subject to an appropriate retention policy designed to ensure that the incentives are in line with the long-term interests of the investment firm. The National Securities and Exchange Commission may impose restrictions on the design or types of these instruments and may even prohibit some of them.

(h) A substantial part, and in any case at least 40% of the variable remuneration element, shall be deferred for a period to be determined taking into account the economic cycle, the nature of the business, its risks and the activities of the employee in question and which shall in no case be less than three years.

In case the amount of the variable remuneration exceeds the average amount of the variable remuneration in the sector in a particularly significant way, at least 60% of the payment of the variable remuneration shall be deferred.

Deferred remuneration payments may not occur more quickly than if they were distributed proportionally in the deferred period.

i) The variable remuneration, including the deferred part, will be paid only if it is sustainable in accordance with the situation of the investment firm as a whole, and if it is justified on the basis of the results of the the entity, the business unit and the employee concerned.

(j) Variable remuneration shall not be paid by means of instruments or methods to evade the requirements set out in this royal decree. For these purposes, the National Securities Market Commission may:

1. impose restrictions on investment service companies for the use of the instruments mentioned in this article;

2. º set the criteria necessary to allow variable remuneration to be contracted according to the negative financial results of the investment services companies;

3. to require investment firms to limit the variable remuneration in the form of a percentage of total net income when this is not compatible with the maintenance of a solid capital base. "

Thirty. A new single additional disposition is added:

" Single additional disposition. Disclosure obligations of the Banco de España in relation to the securitisation exposures of institutions.

The Bank of Spain will disclose the following information:

(a) the general criteria and methods adopted to verify compliance with the provisions of Article 40bis;

(b) annually, a brief description of the outcome of the monitoring examination and the description of the measures imposed in accordance with Article 40a (5). "

Thirty-one. The second transitional provision is worded as follows:

" Second transient disposition. Transitional arrangements for the weighting of exposures that are denominated and financed in the currency of any of the Member States of the European Economic Area.

Until 31 December 2015, the weighting provided for in Article 22.1 shall also apply to exposures to counterparties referred to therein that are denominated and financed in the currency of any of the Member States of the European Economic Area. '

Thirty-two. A new third transient disposition is added:

" Transitional provision third. Transitional arrangements for the application of the requirements for retention of economic interest and due diligence for securitisation positions.

The provisions of Article 40a shall apply to new securitisations carried out on or after 1 January 2011. From 31 December 2014, that scheme shall apply to existing securitisations in the event that new underlying exposures are added or those existing after that date are added. '

Thirty-three. A new fourth transient disposition is added:

" Transitional provision fourth. Transitional arrangements for limits to the calculation of own resources.

1. The preference shares issued prior to the entry into force of Law 6/2011 of 11 April, amending Law 13/1985 of 25 May, of investment coefficients, own resources and information obligations of the financial intermediaries, Law 24/1988 of 28 July 1988 on the Securities Market and Royal Decree of 28 June 1986 on the adjustment of the existing right in the field of credit institutions to that of the European Communities, and not comply with the requirements laid down for this type of instrument in that standard, may continue by computing as own resources of the credit institutions and their groups and the instruments which, as at 31 December 2010, are considered to be equivalent, in accordance with the Spanish legislation, to the elements referred to in Article 12.1 (1), (a), (b) and (d), but not covered by Article 12 (1) (a), or which do not satisfy the requirements laid down in Article 14, shall be considered as covered by Article 12.1.g) until 31 December 2040, subject to the following conditions: limits:

(a) up to 20% of the sum of paragraphs (a), (b), (d) and (g) of Article 12.1, minus the sum of paragraphs (a) and (b) of Article 13.1 between 10 and 20 years after 31 December 2010;

(b) up to 10% of the sum of paragraphs (a), (b), (d) and (g) of Article 12.1, minus the sum of paragraphs (a) and (b) of Article 13.1 between 20 and 30 years after 31 December 2010.

2. For the purposes of Chapter VIII, assets constituting claims and other exposures to credit institutions assumed before 31 December 2009 shall continue to be considered as subject to the same treatment applied in accordance with Article 64.1. as they were before 7 December 2009, but not beyond 31 December 2012. '

Thirty-four. A new fifth transient disposition is added:

" Transient Disposition fifth. Transitional arrangements for joint decisions between supervisors of the European Union.

Under the law of the European Union, until 31 December 2012, the period referred to in Article 10a (2a) of Law 13/1985 of 25 May of investment coefficients and resources own and reporting obligations of financial intermediaries, shall be six months. '

Thirty-five. A new sixth transitional provision is added:

" Transitional provision sixth. Transitional arrangements for the provisions on remuneration policies.

Entities shall adapt their remuneration policies to the requirements laid down in Chapters XIII of Title I and VIII of Title II. In any event, such requirements shall apply to the remuneration granted and not yet paid before the entry into force of this royal decree, relating to services rendered since 2010 and up to the same date. "

Single repeal provision. Regulatory repeal.

As of the entry into force of this royal decree, all provisions of equal or lesser rank shall be repealed as set out in it.

Final disposition first. Amendment of Royal Decree 2606/1996 of 20 December 1996 on deposit guarantee funds for credit institutions.

Royal Decree 2606/1996 of 20 December 1996 on deposit guarantee funds for credit institutions is amended as follows:

One. Two new paragraphs, 2a and 2b are added to Article 3, with the following wording:

" 2 bis. Guaranteed deposits whose remuneration exceeds one of the following limits shall be treated for the purposes of calculating the contributions of the attached entities, the treatment referred to in paragraph 2b:

(a) In the case of time deposits and instruments of a similar nature or that fulfil the same economic function in terms as determined by the Banco de España by Circular, the agreed remuneration exceeds more than 150 basic points to the average Euribor at three months of annual interest, if they are agreed on a three-month period of more than three months, by more than 150 basis points to the average Euribor by six months if they are longer than three months and less than one year or more than one year; 100 basis points to the average Euribor twelve months if they are for a term equal to or greater than one year.

(b) In the case of deposits available in the accounts, the remuneration paid in the periodic settlement of the account exceeds by more than 100 basis points to the average Euribor a month of annual interest.

The Banco de España will publish quarterly, before the 5th of the following month at the end of each quarter, in the "Official State Gazette" and on its website, the interest rates mentioned in the previous paragraphs calculated about the full quarter.

2 ter. The amounts of deposits whose agreed remuneration exceeds the limits of the previous paragraph shall be weighted by 500% for the purposes of calculating the contributions of the entities attached to the corresponding Deposit Insurance Funds.

The excess that would result in such a contribution, which would be applicable if the circumstances of the previous paragraph are not present, will be entered on a quarterly basis in the account of the corresponding fund. Also on a quarterly basis, institutions shall report to their respective fund the total amount of their time deposits whose remuneration exceeds the above limits and the balances of accounts in the settled view with a remuneration exceeding the limit applicable.

For these purposes, the excess of the time deposits shall be understood to be maintained for the entire agreed term. "

Two. The first final provision is amended, which is worded as follows:

" Final Disposition first. Faculty of development.

The Minister of Economy is empowered to dictate the rules that are necessary for the development of this royal decree and, in particular, to update, after the Bank of Spain's report, the amounts of compensation in accordance with the current rules of the European Union. It shall also be empowered, taking into account the evolution of the price of money and the average cost of the liabilities of institutions attached to the funds, to amend the limits laid down in Article 3 (2a), and to reduce or raise the weighting provided for in paragraph 2b of the same Article.

The Banco de España is authorized to carry out the procedure for the election of its representatives in the management committees of the funds, as well as the technical accounting issues of the concepts of deposits and guaranteed securities, of uncommitted net worth, and of the market value of the guaranteed securities.  It is also empowered to lay down the rules necessary for the implementation of the provisions laid down in Article 3 (2a) and (2b). "

Final disposition second. Incorporation of European Union law.

This royal decree partially incorporates into Spanish law Directive 2009 /111/EC of the European Parliament and of the Council of 16 September 2009 amending Directives 2006 /48/EC, 2006 /49/EC and 2007 /64/EC in respect of banks affiliated to a central body, certain elements of own funds, major risks, the supervisory regime and crisis management and Directive 2010 /76/EU of the European Parliament and of the European Parliament of the European Parliament and of the Council Council of 24 November 2010 amending Directives 2006 /48/EC and 2006 /49/EC in respect of the (a) the capital requirements for the trading book and the re-securitisations and for the supervision of remuneration policies.

Final disposition third. Entry into force.

Except as provided for in the first provision, the present royal decree shall enter into force on the day following that of its publication in the "Official Gazette of the State".

The final disposition will enter into force in the month of the publication of this royal decree in the "Official Gazette of the State".

Given in Madrid, June 3, 2011.

JOHN CARLOS R.

The Second Vice President of the Government and Minister of Economy and Finance,

ELENA SALGADO MENDEZ