Royal Decree-Law 2/2011, 18 February, To The Strengthening Of The Financial System.

Original Language Title: Real Decreto-ley 2/2011, de 18 de febrero, para el reforzamiento del sistema financiero.

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I the tensions to which the international financial system has faced since the beginning of the crisis have hindered the fulfilment of its essential role as a channeler of credit to the economy. The increase in the cost and availability of funding has seriously affected the development of the whole of the real economy, limiting the possibilities for economic growth. The difficulties of the financial system to meet the main function of the channelling of savings to the needs of operators spending have both reached to household budgets, such as, in particular, to the financing of small and medium-sized enterprises, real nuclear element of our business.

In this context, the set of credit institutions has faced, as well as severe restrictions on access to financing, to a relative deterioration in their assets, especially those related to the real estate sector, a notable increase of loans classified as doubtful and, finally, to the decrease of its business, as consequence of the duration , intensity and extent of the crisis and the sharp decline in economic activity caused by the same.

The crisis has been shown by public authorities ensuring the basis for the existence of a financial system competitive and solid to provide intermediation between the holders of financial resources and who have investment needs. A well-structured financial system constitutes the main guarantee that a country's productive economy can have the funding required to develop to the best of its ability, generating wealth and job creation. It can be concluded that this whole process is based on trust in the integrity of the institutions and the proper functioning of markets.

This importance of the financial system justified the priority and unavoidable nature of the intervention of the State to ensure proper operation.

In that sense, since the onset of the crisis two types of interventions have been occurring in the international context. On one side stand those measures, if not avoid, unless itself to limit the impact of future crises of the financial system in the whole of the economy: reinforcement of the international financial architecture; the strengthening of supervision; and the adoption of new and much more exacting standards of capital for financial institutions are examples of this. On the other hand, highlights the measures of support to the financial sector, which the States individually or jointly have adopted to regain confidence and mitigate liquidity pressures. Firstly, expanded coverage of relevant assurance systems. On the other hand, faced with contraction and almost disappearance of wholesale funding markets, some States, in parallel with the ECB, articulated mechanisms of liquidity. Thirdly, coping with the deterioration of the own resources of the banks were carried out injections of public capital entities, with different degrees of difficulty. Finally, in order to clarify the value of the damaged assets of banks and facilitate the restructuring of the entities, some States approved aid to clean up their balance sheets and were tested for resistance to a broad set of financial institutions the Government of Spain, meanwhile, has been promoting since the beginning of the crisis a series of measures that they are now completed with the contents of the present Royal Decree, aimed at facilitating access to financing of credit institutions, safeguard the stability of the system, foster their restructuring and efficiency, and, ultimately, ensure the proper channeling of credit to the real economy.

These measures began with the strengthening of the guarantee of bank deposits in tune with all States members of the EU, followed by support to the liquidity of credit institutions that took place through the purchase of high-quality financial assets through the Fund for acquisition of financial assets (FAAF) and the provision of Government guarantees to their debt emissions. Then came the strengthening of the procedures of intervention, discipline and solution of non-viable entities through the Royal Decree-Law 9/2009 which created the Fund of Bank ranked restructuring (FROB), as a complement to actions that can carry out the deposit guarantee funds. In addition, as a way to encourage necessary readjustment of our financial system to the size required in the medium and long term, it was necessary to articulate the recapitalisation of solvent entities, through the acquisition of preferred shares from the FROB, conditioned to the restructuring of credit institutions requesting a temporary support. Finally, there has been hardening of the accounting rules of estimation and recognition of impairment of doubtful loans, and especially mortgage collateral and property awarded in dation in payment, and so recent, transparency has been strengthened through the establishment of a system of information on the situation of balance of the entities, detailing its exhibitions and provisions by type of loans , as well as its business plan and its status of solvency.

Deserves special mention the reform of the legal system of savings banks approved by the Government through the Royal Decree-Law 11/2010 and validated with broad consensus by the Congress of Deputies during the month of July 2010. The depth of reform was a historic milestone in the regime of savings banks with the aim of achieving a greater professionalization of its administration and management, and, above all, provide the ability to take organizational forms that posibilitasen access to the basic capital markets. The legal framework created in July is indispensable to meet the current and future challenges of our financial system and, more specifically, to implement immediately the measures contained in the present Royal Decree-law.

This package has helped minimize the impact of the crisis on the Spanish financial system and global, especially on the public purse. At the same time have led to the process of restructuring the financial sector more important and fast in our history. This restructuring process has been especially intense in the savings banks sector, that in less than a year has passed have 45 individual entities, with an average size of 28.504 million euros, to be integrated by 17 entities or groups of entities, with an average volume of assets of 75.452 million. This reduction in the number of entities has also meant the beginning of a process of reduction in the number of branches and cost structure, promoting a more efficient and competitive financial system.

Additional way to the implementation of the measures promoted by the Government of the nation, Spanish banks passed, in July 2010, a testing of resistances-extensive, since they covered all of our entities, and intense, that is, with very severe cases, especially in what refers to the evolution of credit to the real estate sector and construction. The publication of these exercises, in exhaustive detail by type of assets, showed the location of solidity and strength of our financial system, showing that credit institutions Spanish, with very few exceptions (and little meaningful for the whole system) were in a good position to deal with very adverse and unlikely situations.

On the other hand, the entities have come also reacted to the challenges presented by the current environment by adopting measures such as increasing their deposit base retail, streamlining its cost structure, strengthening its capital and reorganizing their assets. Thus, the whole of the Spanish banking system from January 2008 until the end of 2010 recognized and took losses in the value of assets by an amount equal to 9% of GDP through the provision of NET specific provisions, which logically have slowed their results, the use of the background of generic provision and recognition of 'fair value' against reserves in the processes of integration of savings banks. Also they have carried out a recapitalization for an approximate amount of 3% of GDP, still today the level of solvency of the whole of our remarkable system, with a TIER 1 level of 9.6% of assets weighted by risk, according to the latest data available.

This being the current situation of our financial system, the evolution of the last months of financial strains in the environment of the euro area has led to doubts about the ability of the Spanish financial system. Constituting the trust the pillar of a financial system, this perception risks create an undesirable dynamic as in how much these elements of uncertainty can make it difficult even more access to funding entities, which in turn would increase the perception of risk hampering the flow of credit to the economy, eroding the ability of growth , in a negative feedback process.
It is therefore essential to prevent the development of this dynamic and immediately eliminate any uncertainty with regard to our financial system and, by extension, with the whole of our economy. To this end, it is necessary to ensure that each of the entities that make up the Spanish banking system present levels of capital of maximum quality sufficient to dispel any doubts not only about their current solvency, but also about its strength against all types of scenarios, including those unflattering even when they have a chance of materialization remote. In this way the confidence in the Spanish banking system, will consolidate which facilitate access to funding to all entities contributing to the achievement of the ultimate goal of any banking system, i.e. fluid channelling savings into investment.

In this context, the present Royal Decree-Law responds to a dual objective: on the one hand, strengthen the level of solvency of all credit institutions, through the establishment of a high level of demand in relation to the capital of the highest quality, in order to dispel any doubt about its solvency; and speeding up the final phase of restructuring of the entities, through the indispensable framework created by the Royal Decree-Law 11/2010. These objectives will ensure the role of the financial sector to channel credit into the economy and that in the case of savings combines with the essential objective of the maintenance of their social work.

The measures referred to in the present Royal Decree law articulated in two large blocks strengthening the capital of entities and the adaptation of the FROB as a public instrument to facilitate the new required capitalization.

As for the strengthening of solvency, sets an application forward and demanding new standards of capital, Basel III. So, is the immediate establishment of a minimum of primary capital in relation to risk-weighted assets, basically following the definition referred to in Basel III compliance in 2013. This minimum level of the main capital ratio stands at 8%, being 10% for those entities that have not registered securities representing its capital to a third party by at least 20%, and, in addition, submit a ratio of greater than 20% wholesale funding. It is thus, that entities provide a capital, of the highest quality, sufficient to ensure high strength, being the highest requirement for those entities that have less agility to capture basic capital if necessary.

In addition, the Bank of Spain to an individual entity may require a higher level of principal based on the results of resistive exercise can do to the whole of the system.

The elements comprising the principal are, in line with provisions of Basel III for 2013: capital, reserves, issue premiums, the positive valuation adjustments, the minority interest; and, in addition, the instruments signed by FROB and, temporarily, the mandatory convertible instruments in shares before 2014 and that meet certain requirements that ensure a high capacity of absorption of losses. These items will be accounted by the negative results and losses, the negative valuation adjustments and intangible assets.

These new requirements will take effect on March 10, 2011. In addition, given the evidence that there will be some entities with difficulty to achieve this new requirement imminently, standard has designed a progressive strategy for compliance.

Those entities that do not reach the required level of main capital to March 10 will have 15 working days to inform the Bank of Spain strategy and calendar with it to ensure compliance with the new requirements of 8% or 10%, principal, as appropriate, by September 30, 2011. This strategy, which can monitor the uptake of resources from third parties and IPO of the entities, shall be approved by the Bank of Spain, who may also require modifications or additional measures.

However, given that could arise some questions that could delay the fulfillment, operations or procedures that could that have to carry out the entities, and which in some cases could be numerous, related the Bank of Spain may authorize a postponement of up to a maximum of 3 months on the previous date and, exceptionally, in cases of outputs to bag , and provided a set of milestones that generate certainty about the decision and the amount of issuance have been met, may extend the execution until the first quarter of 2012.

Once completed the transitional period and when institutions have reached the new main capital requirements, and following the conceptual structure of Basel III, which establishes a cushion of capital conservation, up to 20% of the ratio of principal demanded economic failure, determine the imposition by the Bank of Spain's restrictions that may affect the distribution of dividends , the allocation to social charity work, the remuneration of preference shares, the variable remuneration of Directors and management and share buybacks.

Anticipating the possibility that not all entities can raise capital basic capital markets in the second block of the present Royal Decree Law modifies the legal of the FROB scheme so that the proportion of support is carried out through the temporary acquisition of shares, in market terms, of those entities that do not comply with the levels of resources required and that request either immediately or once attending the market they have not captured all the necessary resources.

This measure, which may logically involve the input of the public sector in the share capital of credit institutions has been designed within a framework of strict compliance with the applicable legislation of the European Union with maximum protection of public resources.

Thus, first of all, the price of acquisition of the shares or contributions to the share capital shall be fixed according to the economic value of the entity, which will be determined by one or more independent experts appointed by the FROB, through a procedure that will develop the FROB, based on commonly accepted methodologies and in accordance with the market value.

In terms of the divestment, it should be stressed that the presence of the FROB in the capital of the entities is temporary, being the maximum period of five years tenure. The transfer will take place by procedures that ensure competition. However, the Fund for orderly bank restructuring may, at the time of acquisition of the securities, establish the terms in that, within a maximum period of one year from the date of subscription or acquisition, it will resell such securities authorities thereof or third party investors proposed by the beneficiary of its action. This deadline may be of two years, in which case they may require applicant institutions additional commitments to those provided for in its recapitalisation plan. The conditions of such resale shall ensure efficient use of public resources and carry out under market conditions, complying in any case with the Spanish regulation and EU competition and State aid.

The temporary vocation of support from the FROB in the provision of basic capital determines the investment takes place through the acquisition of shares, in order to at that time the FROB can rid easily and in the same market conditions. This requirement determines also the beneficiary of support is a bank. Is why it is established that if the credit institution requesting financial support is a savings box, this will have a period of three months for the transfer of all of your financial activity well a Bank through which pass to indirectly exert its financial activity while maintaining its legal figure of box or becoming Foundation to the Bank acting as the central entity of the institutional system of protection which in their case part.

In addition, the acquisition of securities by the FROB is conditioned to the elaboration by the entity of a recapitalization Plan that, in addition to presenting a business plan, must assume certain commitments related to, for example, its structural cost reduction, improvement of its corporate governance or the evolution of your credit activity.

The acquisition of securities by the FROB will determine, in turn, joining the Board of Directors of the issuer of securities in strict proportion to the percentage of participation of the entity.

The standard also provides for the possibility of acquisitions by the FROB of convertible preferred shares in contributions to the share capital of credit unions, in a regime that reproduces the planned until the entry into force of the present Royal Decree-law.

Finally, note that the Royal Decree-Law also provides for a series of fiscal measures aimed at ensuring neutrality in the process of restructuring of the financial system.
Major fiscal issues that are addressed are the inclusion of credit institutions integrated into a SIP in the Group's fiscal consolidation of the central entity, the application of tax credits prior to the Constitution of the tax group, the segregation of all financial business carried out by banks in favor of a Bank and, finally, the intra-group transactions when the Bank ceases to belong to the tax group.

In short, these specific amendments are intended to ensure the process of restructuring the financial sector tax costs associated with the process itself, derived from the impossibility of applying the tax credits generated or generated by credit institutions members of the process and that they would be fully applicable in a process of traditional fusion or arising from incorporation into the taxable income of the results without intra-group pending taxation when the output of the tax group of banking institutions.

It should be noted, finally, that the present Royal Decree-law retains the legal status of the law 31/1985, 2 of August, of regulation of the basic rules on guiding organs in the boxes of savings (LORCA). The essence of the law is not changed and maintained the institutional alternatives provided for therein.

In short, the measures referred to in the present Royal Decree-Law, direct ultimate objective, to ensure the efficiency of our financial system making the channeling of credit to the real economy and, thereby, enabling the most possibilities for growth and job creation.

If with the Royal Decree of creation of the FROB and reform of the legal system of savings banks were created the structure and the necessary tools for the restructuring of our financial system, in full consistency with both, with this third Royal Decree-law encourages the immediate use of such structures and instruments to conclude the final phase of the restructuring process. It's a financial system more solvent, more transparent and with more facilities of capitalization, thus culminating stage of further modernization of our recent history financial.

II title I of Royal Decree-law is dedicated to the forecasts of reinforcement of the solvency of credit institutions.

Article 1 establishes the new requirements of main capital of credit institutions. Establishes that these entities must have a principal, at least 8% weighted by risk total exhibitions, calculated in accordance with the provisions of the law 13/1985, of 25 may, investment coefficients, own resources and obligations of information of financial intermediaries and its implementing regulations.

Second, sets a higher requirement of 10%, for those entities that exceed 20% of wholesale funding and have not registered securities representative of share capital or rights of voting, unless, a percentage equal to or greater than 20% thereof to third parties. The higher requirement is justified in the greater difficulty that institutions that meet both requirements have to raise private capital.

Thirdly, you specify that up to 20% of the ratio of principal demanded economic failure, will determine the Bank of Spain to impose restrictions on the distribution of benefits in the form of dividends, of variable remuneration for employees or share repurchase.

Fourthly, expected that the Bank of Spain can enforce a level of principal if the entity does not reach the required minimum equity level in this test in the more adverse scenario of a test of the whole system.

In any case the fixing of these new capital requirements does not affect the full force of the law 13/1985, of 25 may, and its implementing regulations, which is particularly relevant in terms of possible breaches of new requirements, in which case shall apply the provisions of article 11 of this law in respect of insufficient own resources.

Article 2 of Royal Decree-Law establishes the definition of principal in line with the content of the so-called «common equity tier 1» laid down in the Basel III agreement. The elements that make up the principal are, essentially, under Basel III (2013): capital, reserves, issue, positive valuation adjustments premiums, minority interest; most instruments signed by the FROB and Transiently mandatory convertible instruments in shares before 2014. Accounted for negative results and losses, settings negative valuation and intangible assets.

Finally, article 3 of this first title of the standard includes the penalties for failure to comply with the new capital requirements, establishing the regime provided for in law 26/1988, of July 29, discipline and intervention of the credit institutions, for breaches of the own resources rules by reference. Such a regime considered very serious infringement an insufficiency of capital for more than six months below 80% of the demanded and severe if such failure occurs between 80% and 100%.

III the title II of the regulation includes a single article devoted to the amendment of several provisions of the Royal Decree-Law 9/2009, of 26 June, on bank restructuring and reinforcement of the resources of credit institutions.

Paragraph one amends article 3 of the mentioned Royal Decree-law referred to the Government's Fund for orderly bank restructuring. The main change is that relating to the composition of the Governing Committee that will be composed from now by nine members appointed by the Minister of economy and finance, of whom two shall be on behalf of the Ministry of economy and finance, one of the Secretary of State of finance and budgets, and another of the State Secretariat for economic four shall be at the proposal of the Bank of Spain and three representing the deposit guarantee funds. The rest of sections, relating to appointments, terminations and substitutions, adapt to the entrance on the Governing Committee of two representatives of the Ministry of economy and finance.

The paragraph two amends title II to the Royal Decree-Law 9/2009 June 26, consisting of five items that constitute one of the main innovations introduced by the standard.

New article 9 sets out the instruments that will have the Fund for orderly bank restructuring for the reinforcement of the resources of credit institutions. The Fund may take financial support measures, such as the acquisition of shares representing the share capital or contributions to the share capital of the entities that banks and credit unions need to reinforce their own resources and request. So it is not necessary that they are in a situation of economic and financial difficulties that may affect their viability, provided for in article 6 of the Royal Decree-Law 9/2009, of 26 June.

In any case, the standard features that the subscription of the securities shall be conditional to the elaboration by the requesting entity of a plan of recapitalization that must be approved by the Bank of Spain. Survives the requirement envisaged so far for support from the Fund, according to which prior to the decision on the signing of titles, you must rise to the holder of the Ministry of economy and Hacienda an economic report that will detail the financial impact of this acquisition on funding charged to the general budget of the State This can oppose, accordingly, in the period of 5 working days since the memory is high you.

Continues the rule establishing that contributions committed by the Fund for orderly bank restructuring may be made in cash or by delivery of public debt securities or securities issued by the Fund itself. Also establishes the Fund for orderly bank restructuring will satisfy the contributions committed by offsetting of credits have his claim against the beneficiary entities.

The fifth paragraph of the new article 9 establishes the valuation rules that will govern the purchase or subscription of securities by the Fund. Sets the price shall be fixed in accordance with the economic value of the credit institution, which shall be determined by one or more independent experts appointed by the Fund for orderly bank restructuring, through a procedure that will develop the Fund for orderly bank restructuring following the commonly accepted methodologies and in accordance with the market value.

On the other hand, establishes that the subscription of shares by the Fund for orderly bank restructuring will immediately determine its incorporation to the Board of Directors of the issuer in the proportion resulting from their participation in the State to ensure the adequate performance of the recapitalization plan.
In terms of the divestment by the Fund establishes that this will take place through its disposal through procedures that ensure competition and within a period not exceeding five years from the date of your subscription. In any case, the Fund for orderly bank restructuring will attend along with any or some of the other partners or shareholders of a credit institution in question to any processes of sale of securities on the same terms that they may arrange. Finally establishes that within a maximum period of one year from the date of subscription or acquisition, the Fund for orderly bank restructuring may resell the securities underwritten or acquired to entities that have issued them or others proposed by them, according to market conditions and provided that the sale price to provide an appropriate investment market return. This deadline may be of two years, in which case they may require applicant institutions additional commitments to those provided for in its recapitalisation plan.

For the fixing of the price of subscription and alienation will require following a report of the General intervention of the administration of the State.

The new article 10 provides the regime of acquisition by the Fund for orderly bank restructuring of convertible preferred shares in contributions to the share capital of credit unions, regime that reproduces the planned until the entry into force of the Royal Decree-law.

Article 11, on the other hand, sets a deadline of three months for the transfer of all of the financial activity of those boxes requesting support of article 9 to the Bank through which indirectly exert its activity, to the relevant Bank in its process of transformation in Foundation, to the Bank that acts as a central body of the institutional system of protection whereby if they comprise part.

The new article 12 sets the contents of the necessary plan of recapitalization that the entity should develop to fund subscribes the corresponding titles of its social capital.

Establishes that such a plan should include a business plan in which are set targets for efficiency, profitability, leverage and liquidity. Likewise, the standard has applicant institutions must assume commitments of reducing structure costs, measures aimed at improving its corporate governance and commitments to increase funding to small and medium-sized enterprises, in terms that are consistent with the objectives set out in its business plan.

The Fund for orderly bank restructuring will require applicant entities additional commitments to preserve an efficient use of public resources, as well as providing periodic information in order to comply with its obligations of information to European authorities.

Finally, the new article 13 establishes the obligation of compliance with standards of good governance of listed companies for applicant entities.

The final part of Decree-Law IV includes five additional provisions, four transitional provisions, a repealing provision and five final provisions.

These provisions include the first transitory provision which establishes the strategy of implementation of the new capital requirements.

Repealing clause general followed five final provisions including the modification of various precepts of the Royal Legislative Decree 4/2004, of 5 March, which approves the revised text of the law of corporation tax, an authorization for the immediate development by the Bank of Spain of the definition of wholesale financing provided for in article 1 of the Royal Decree-law the reference to competence titles and the input clause in force the day after its publication.

The adoption of the measures provided for in this Royal Decree-law is essential to strengthen the confidence in our financial system, preventing generating dynamics of uncertainty that can hinder access to financing by financial institutions and, ultimately, prevent the normal flow of credit to the economy. Therefore, such measures required to go to the procedure of Royal Decree-Law, meeting the requirements of article 86 of the Spanish Constitution in terms of its extraordinary and urgent need.

By virtue, making use of the authorisation contained in article 86 of the Spanish Constitution, a proposal from the second Vice-President of the Government and Minister of economy and finance and prior deliberation of the Council of Ministers at its meeting of February 18, 2011, I have: title I reinforcement of chapter I principal article 1 credit own resources. Strengthening of the solvency of credit institutions.

1. the consolidated groups of credit institutions, as well as credit institutions not integrated in a consolidatable group of credit institutions, which can capture repayable funds from the public, must have a main capital of at least 8% of their total exposures by risk-weighted and calculated in accordance with the provisions in law 13/1985 May 25, coefficients of investment, resources and obligations of information of financial intermediaries and its implementing regulations.

2 the previous percentage shall be 10% for consolidated groups of credit institutions and credit institutions individual mentioned in the preceding paragraph who fulfil the following conditions: a) have a coefficient of wholesale funding exceeding 20% according to the definition established by the Bank of Spain, and, b) do not have distributed titles representative of its capital or voting rights by at least, a percentage equal to or greater than 20% thereof to third parties, including shareholders or partners. These effects will be in account shares held by savings banks that have brought its financial business to a bank to develop its own object as a credit institution, the foundations caused by transformation of savings or participation in the share capital of the Fund for orderly bank restructuring. In the case of consolidated groups of credit institutions which include one or more savings banks that have opted to develop its own object as a credit institution in an indirect way, this condition shall be verified on the bench that have brought its financial business.

3. Once completed the first transitional provision, provisions when coincidentally an entity presents a main capital below the minimum established in the preceding paragraphs and this level of failure is less than 20% of the minimum required, the Bank of Spain will impose restrictions that may affect the distribution of dividends, the allocation to the charitable work , the variable remuneration of Directors and management, remuneration of preference shares and share buybacks.

In any case, the restrictions provided for in this section will no longer be applicable as from the initiation of a disciplinary record as provided in article 3.

4. the Bank of Spain may require the entities or groups mentioned in this article, the fulfillment of a level of principal higher than that laid down in paragraphs 1 and 2 If the entity does not reach, in the more adverse scenario of a test of the whole system, the level of minimum resources required in this test and up to the limit of that requirement.

5. the provisions of this article shall be without prejudice the application of provisions in law 13/1985, of 25 may, investment coefficients, own resources and obligations of information of financial intermediaries and in its policy development, and especially the provisions of article 11 of this law in respect of insufficient own resources.

Article 2. Main capital.

1 a the purposes as provided in the preceding article, shall mean principal of a credit institution the result of adding the following elements of its own resources: a) the share capital of corporations, excluding, where appropriate, redeemable and non-voting shares; the Foundation funds and savings banks participatory fees and participatory association fees issued by the Spanish savings banks Confederation; contributions to the share capital of credit unions. In any case will be excluded from the calculation actions or Computable values mentioned in this point in power of the entity or any entity consolidatable.

(b) the share premium paid for the subscription of shares or other instruments provided for in the previous letter.

(c) effective and express reservations, as well as items that are classified as reserves in accordance with the rules on own resources of credit institutions and the positive results of the exercise Computable in accordance with such regulations.

(d) the positive valuation adjustments of available for sale financial assets that are part of equity, net of tax effects.

(e) the representative holdings of minority interests corresponding to ordinary shares in the companies of the consolidatable group, in accordance with the provisions of the legislation of own resources.
(f) the Computable instruments signed by the Fund of ranked bank restructuring in the framework of its regulations.

2 of the result of the sum above shall be deducted the amount of: to) the negative results of previous exercises, which are counted as balance in the revaluation accumulated losses, and losses of the current period, including the amount of the results of exercise loss attributed to the minority, as well as balances equity accounts related to negative results in accordance with the rules on own resources of credit institutions. To these effects, the negative valuation adjustments of financial assets available for sale will be considered net of tax effects.

(b) the intangible assets, including goodwill from business combinations, consolidation or the application of the equity method. The value of such assets shall be calculated pursuant to the Bank of Spain.

Chapter II sanctioning regime article 3. Sanctioning regime.

Without prejudice to the provisions of the first transitional provision of this Royal Decree-Law, non-compliance with the provisions of article 1 shall be considered serious or very serious violation in accordance with the provisions of point (c)) of article 4 and in the letter h) article 5 of law 26/1988, of July 29, discipline and intervention of the credit institutions.

Title II reform of the Fund for orderly bank restructuring article 4. Modification of the Royal Decree-Law 9/2009, of 26 June on bank restructuring and reinforcement of the resources of credit institutions.

Royal Decree-Law 9/2009, of 26 June on bank restructuring and reinforcement of the resources of credit institutions is to be re-worded as follows: one. Article 3 is drawn up in the following way: «article 3. The Fund for orderly bank restructuring government.

1. the Fund for orderly bank restructuring will be governed and managed by a Governing Committee consisting of nine members appointed by the Minister of economy and finance, of which two will be on behalf of the Ministry of economy and finance, one of the Secretary of State of finance and budgets, and another of the State Secretariat for economic four shall be at the proposal of the Bank of Spain and three representing the deposit guarantee funds.

Assist, in addition, sessions of the Governing Committee, with voice but without vote, a representative of the General intervention of the administration of the State designated by the Minister of economy and finance on the proposal of the General Auditor.

One of the members appointed on the proposal of the Bank of Spain will be his Deputy Governor, who will hold the Presidency of the Governing Commission. In case of absence of the President, it will be replaced by one of the members appointed on the proposal of the Bank of Spain, elected by a majority among the members of the Governing Committee attending the session. The members of the Governing Committee shall designate from among which they are so on the proposal of the Bank of Spain, who will perform the functions of Secretary of the Governing Commission.

Representatives of the deposit guarantee funds will be appointed among the members of his Commission manager having status of representatives of the Member, by majority agreement of these credit institutions. Of the three representatives of the deposit guarantee funds, one will be in representation of banks, another of savings banks and other credit unions.

By the same procedure, two deputy representatives of the designated on behalf of the Ministry of economy and finance, shall appoint two alternate representatives of those proposed by the Bank of Spain, and an alternate representative for each of those proposed by the deposits guarantee funds, which will replace the holders in the event of vacancy, absence or illness. In the case of the deposits guarantee funds representatives, must also be replaced when the Governing Committee will discuss issues directly affecting an entity or group of entities with which it is linked as administrator, management or labor, civil or commercial contract or any other relationship that could impair the objectivity of their decisions.

The duration of the mandate of the members of the Governing Committee shall be four years being such a mandate renewable only once for same period of time.

The members of the Governing Committee shall cease in his position by the following causes: a) expiry of the term of his mandate as a member of the Governing Commission.

(b) termination of cargo that holds in the case of representatives from the Ministry of economy and finance and the Bank of Spain.

(c) resignation accepted by the Minister of economy and finance.

(d) separation agreed by the Minister of economy and finance due to incompatibility, serious breach of their obligations, permanent disability for the exercise of its function or fraudulent offense conviction.

(e) expiry of the term of his mandate as a member of the management of the deposit guarantee funds.

The ceasefire agreement will be adopted by the Minister of economy and finance. In the case of representatives of the Bank of Spain or the deposit guarantee funds that agreement will be adopted on a proposal from the Bank of Spain. When the cease-fire affects a member of the Governing Commission that is representing the deposit guarantee funds, you must hear, previously, Commission management, which, for this purpose, will be his will by majority agreement of the representatives of the participating credit institutions, without the intervention of the Bank of Spain's representatives.

2. the Steering Committee shall meet whenever it is convened by its Chairman, on his own initiative or at the request of any of its members. It is also empowered to establish its own regime of calls.

3. the Steering Committee shall determine its own operating procedures and may agree to the delegations or powers of Attorney deemed appropriate for the due performance of their duties.

(4 guiding shall, in addition to the functions referred to in other provisions of the present Royal Decree-Law, the following: a) approval of the financing operations provided for in paragraph 5 of article 2.

(b) approval of the accounts which the Fund for orderly bank restructuring shall pay annually to the Minister of economy and finance, as well as of the report that, pursuant to article 4, must be raised to the Minister of economy and finance for its referral to the Commission of economy and Finance of the Congress of Deputies.

(c) adoption of the preventative measures and sanitation provided for in articles 6 and 7.

(d) adoption of the measures of strengthening of own resources provided for in article 9.

5. for the valid Constitution of the Governing Commission of the Fund for orderly bank restructuring for the purpose of holding meetings, discussions and agreements, will require assistance at least half of its members with right to vote. Agreements shall be adopted by a majority of its members, having the President in the event of a tie vote on the number of votes.

«6. the members of the Governing Committee shall be obliged to keep secret the information know under its participation in the work of the Fund, failing to make use of the same for purposes other than the performance of the functions entrusted to the Fund for orderly bank restructuring.»

Two. Title II is worded in the following way: «title II reinforcement of the resources of credit institutions chapter I instruments for the reinforcement of the resources of credit article 9. Instruments for the reinforcement of the resources of credit institutions.

1. the Fund for orderly bank restructuring may take financial support measures, such as the acquisition of shares representing the share capital or contributions to the share capital of the entities, who, without incurring in the circumstances set out in article 6 of the present Royal Decree-Law, need to strengthen their own resources and request.

2. the subscription of the securities referred to in the preceding paragraph will be conditioned to the elaboration by the requesting entity of a plan of recapitalization, with the content required in chapter II. This plan must be approved by the Bank of Spain, which must provide the information to the Ministry of economy and finance through the General direction of Treasury and financial policy.

3. with prior to the decision on the subscription of securities, the Fund for orderly bank restructuring rise to economy Minister and Hacienda an economic report that will detail the financial impact of this acquisition on funding charged to the general budget of the State. Based on that report and the emitted by the General intervention of the administration of the State as provided in the paragraph below five, the Minister of economy and finance may object, accordingly, in the period of 5 working days since this memory is high you.
4. contributions committed by the Fund for orderly bank restructuring can be made in cash or by delivery of public debt securities or securities issued by the Fund itself. In addition, the Fund for orderly bank restructuring will satisfy contributions committed by offsetting of credits have his claim against the applicant entities.

5. the price of acquisition or subscription shall be fixed in accordance with the economic value of the credit institution, which shall be determined by one or more independent experts appointed by the Fund for orderly bank restructuring. The assessment will take place through a procedure that will develop the Fund for orderly bank restructuring following the commonly accepted methodologies. Among other factors, this assessment shall take into account, where appropriate, sanitation of extraordinary operations undertaken by the entities.

If during the five months prior to the subscription would have placed third investors a percentage of significant capital, for the purpose of consideration the price paid as market value, and this percentage was higher than that to acquire the Fund for orderly bank restructuring, the subscription price will be the same that there had been cited placement. If, in the case of a percentage of significant capital, this percentage was lower than the acquired by the Fund for orderly bank restructuring, the subscription price will be quoted placement price as a reference. In any case the acquisition or subscription will take place in accordance with the Spanish legislation and the European Union on competition and State aid.

The subscription price will be held following a report of the General intervention of the administration of the State.

6. the subscription of shares and contributions to the share capital by the Fund for orderly bank restructuring will determine, in any case, by itself and without any other act or agreement, joining the Board of Directors of the CA to ensure the adequate performance of the recapitalization Plan. The Fund for orderly bank restructuring will appoint the person or persons who have their representation to that effect and will be available in the Board of Directors of as many votes as resulting from applying to the total number of votes their percentage of participation in the State.

For the purposes of the provisions of the third paragraph of article 5 of Royal Decree-Law 11/2010, from July 9, of governing bodies and other aspects of the legal regime of the savings banks not be taken into account the participation of the Fund for orderly bank restructuring in the social capital of an entity.

7 it shall apply to certificates signed by the Fund for orderly bank restructuring in performance of the duties entrusted him in this article the provisions of paragraphs 6 and 9 of article 7.

8 in order ensure greater efficiency in the use of public resources the divestment by the Fund for orderly bank restructuring of securities made in exercise of the functions entrusted to it in this article will be made by its disposal through procedures that ensure competition and within a period not exceeding five years from the date of your subscription.

Without prejudice to the provisions of the preceding paragraph, the Fund for orderly bank restructuring will go along with any or some of the other partners or shareholders of a credit institution in question to any processes of sale of securities on the same terms that they may arrange.

In addition, the Fund for orderly bank restructuring may, to the subscribe or acquire the titles referred to in this article, establish the terms on which, within a maximum period of one year from the date of subscription or acquisition, will resell such securities to the same CAs or third investors proposed by the beneficiary of its action. The conditions of such resale shall ensure efficient use of public resources and carry out under market conditions, complying in any case with the Spanish regulation and EU competition and State aid.

The maximum term provided for in the preceding paragraph may be two years from the date of subscription or acquisition, in which case, the Fund for orderly bank restructuring may require applicant institutions additional commitments to the planned article 12(1) within its recapitalization plan.

9. on a quarterly basis, the requesting entity shall forward to the Fund for orderly bank restructuring a report on the degree of compliance with the measures referred to in the approved recapitalization plan. The Fund for orderly bank restructuring, in view of the contents of that report, may require the adoption of actions that may be necessary to ensure that the recapitalization plan is indeed a term.

Disposal will take place following a report of the General intervention of the administration of the State.

10. the provisions of this article shall be without prejudice of compliance with the applicable legislation in the field of competition.

Article 10. Acquisition of mandatory convertible securities.

1. the Fund for orderly bank restructuring can also buy titles that consist of convertible preference shares in contributions to the share capital of credit unions, issued by those entities which, without incurring in the circumstances set out in article 6 of the present Royal Decree-Law, need to strengthen their own resources for the exclusive purpose of carry out each other integration processes and request.

The subscription of such titles by the Fund for orderly bank restructuring will be conditioned by the development by entities of an integration plan that should detail measures and specific commitments aimed at achieving this objective and which must be approved by the Bank of Spain, under the principle of the more efficient use of public resources. The aforementioned acquisition should be effect taking into account, in all cases, the time and risk of the operation, the need to avoid the risk of a competitive distortion as well as that such acquisition facilitates the implementation and fulfillment of the plan of integration and will be chaired by the beginning of the more efficient use of public resources.

The integration plan will involve among others, an improvement of its efficiency, streamlining their administration and management as well as a downsizing of its productive capacity and all this with the aim of improving their prospects.

2. the securities referred to in this article shall be governed by the provisions contained in the second additional provision of law 13/1985, of 25 may, about investment coefficients, own resources and obligations of information of financial intermediaries, with the following specialties.

(a) the issuance will be exceptional in nature and can agree only on the basis and for the purposes of this Royal Decree-law. CAs must approve, at the time of the adoption of the agreement for issuance of the preference shares provided for in this article, the necessary agreements for the subscription of capital in the amount of required contributions. The terms and conditions of the reward of the preference shares shall take into account, in any case, the principles established by the European Commission.

(b) the authorities should commit themselves to repurchase securities underwritten by the Fund for orderly bank restructuring as soon as they are able to do so in the terms involved in the integration plan. After five years of disbursement unless preference shares have been repurchased by the entity, the Fund for orderly bank restructuring may request its conversion into social contributions of the issuer. The exercise of this right shall be, where appropriate, within a maximum period of 6 months from the completion of the fifth year since the disbursement of the preference shares. However the above, issuance agreement must contemplate also the convertibility of the preferred shares at the request of the Fund for orderly bank restructuring if, before the course of the period of five years, the Bank of Spain is very unlikely, in view of the situation of the entity or his group, which repurchase of the preference shares can carry out within the time limit.

(c) preference shares issued to the dispositions in this precept will be Computable as basic resources, but it is obligatory to do so they are listed on an organized secondary market. For this purpose, they will not them apply the limitations established by law for the computation of own resources.

(d) the agreement of issuance of these titles must comply, in addition, with conditions remaining engaged in the integration plan.

3. with previous character to the effective acquisition of these securities, the Fund for orderly bank restructuring rise to economy Minister and Hacienda an economic report that will detail the financial impact of this acquisition on funding charged to the general budget of the State. The Minister of economy and finance may object, accordingly, in the period of 5 working days since the memory is high you.
4. the divestment by the Fund for orderly bank restructuring will take place through its repurchase of securities by the CA or its disposal to third parties. When the divestment of such securities or those resulting from the conversion is carried out through its sale to a third party, this should be conducted through procedures that ensure competition and within a period not exceeding five years from the date of implementation of the integration plan, which shall not apply in the case that the entity he may apply paragraph 8 of this article. The divestment of contributions to the share capital is not subject to any legal or statutory restrictions.

5. to the conversion of preference shares in the capital contributions shall you apply provisions of paragraphs 6 and 9 of article 7.

6. with quarterly periodicity, the entity designated by the entities involved in the integration process, or, in your case, the resulting entity of the same be forwarded to the Bank of Spain a report on the degree of compliance with the measures referred to in the approved integration plan. The Bank of Spain, in view of the contents of that report, may require the adoption of actions that may be necessary to ensure that the integration plan is indeed a term.

7. If, as a consequence of the evolution of the economic and financial situation of the entity resulting from the process of integration and the development of market conditions, be warned that the integration plan not can be met in the terms in which it was approved, the entity may ask the Fund for orderly bank restructuring a modification of these terms, which may include (, among other things, an extension of the period of repurchase of securities underwritten by the Fund referred to in paragraph 2.b) above, up to two years. Modification of integration agreed upon with the Fund for orderly bank restructuring plan shall be approved by the Bank of Spain.

8. If, as a consequence of the evolution of the economic and financial situation of the entity resulting from the process of integration and the development of the conditions of the markets, the integration plan could not be conducted and the entity is located in the situation referred to in article 6, shall apply to that institution as provided in article 7 and must provide for schemes that, pursuant to that article, should be adopted as appropriate with respect to certificates signed by the Fund for orderly bank restructuring.

Article 11. Transfer of the financial activity in certain cases.

1 savings banks may apply for the performance of the Fund for orderly bank restructuring provided for in paragraph one of article 9. To do so, shall transfer its financial activity to a Bank pursuant to the provisions of articles 5 or 6 of the Royal Decree-Law 11/2010, July 9, of governing bodies and other aspects of the legal regime of savings banks within a maximum period of three months from the date in which be notified recapitalization plan approval refers to which the following article.

2. If the applicant body in the performance of the Fund for orderly bank restructuring referred to in paragraph one of article 9 was a Bank jointly held by savings banks pursuant to article 8.3 of the Act 13/1985 of 25 may, investment coefficients, own resources and information obligations of the financial intermediaries those must transfer all its financial activity to the Bank and carry on business pursuant to the provisions of articles 5 or 6 of the Royal Decree-Law 11/2010 of 9 July, governing bodies and other aspects of the legal regime of savings banks within a maximum period of three months from the date in which be notified recapitalization plan approval refers to which the following article.

Chapter II Plan of recapitalization article 12. Content of the recapitalization plan.

1 recapitalization plan referred to in the second paragraph of article 9 of the present Royal Decree-law should include a business plan in which are set targets for efficiency, profitability, leverage and liquidity. In addition, applicant institutions must assume the following commitments: to) applicant entities assume, if so requested by the Fund for orderly bank restructuring, the commitment to reduce the costs of structure compared to the total amount at the time of subscription of the securities by the Fund for orderly bank restructuring.

(b) the applicant entities shall take measures aimed at improving its corporate governance. In general they adapt provisions in the standards of corporate governance of listed companies and, in particular, they must comply with the provisions of article 13.

(c) the applicant entities assume the commitment to increase funding to small and medium-sized enterprises, in terms consistent with the objectives set out in its business plan.

In the event that the applicant entities had been previously issued convertible preferred shares that have been signed by the Fund for orderly bank restructuring, may proceed, if Fund requested by that and by mutual agreement, to immediate conversion into ordinary shares or contributions to the share capital under the terms provided in the respective public writings of emission.

Where the applicant entities are savings, necessarily take the regime laid down in the additional provision fifth of the Royal Decree-Law 2/2011 February 18, for the strengthening of the financial system, in the field of agreements concerning their participation in the Bank through which to develop, where appropriate, its activity as a credit institution.

2. the Fund for orderly bank restructuring will require the applicant entities additional commitments to those listed in the previous section to preserve an efficient use of public resources.

Equally, the Fund for orderly bank restructuring will require additional commitments of providing periodic information applicant entities in order to comply with its obligations of information to the competent authorities of the European Union.

Article 13. Standards of corporate governance to applicant entities.

1. the number of members of the Board of Directors will not be less than five nor more than fifteen members, of which at least one-third, will be independent directors.

Sunday, independent, and external advisors constitute the majority of the Board of Directors, the number of Executive Directors being the minimum necessary, depending on the complexity of the corporate group and the percentage of participation of the Executive Directors in the capital of the entity.

The Board of Directors shall explain to the Board or General Assembly that it shall make its appointment the nature of each Director; likewise be reviewed annually in the annual corporate governance report, upon verification by the appointments Committee, which shall be in the State.

The independent directors may not remain as such during a continuous period of more than 12 years.

Authorities will make public through its website, and keep updated, information on his advisers.

2. the Board of Directors will be in its bosom, a Commission, or two separate, nomination and remuneration committees.

The appointments Commission, the assessment of competencies, knowledge and experience required in the Council, shall be responsible for, among other functions, definition, therefore, functions and skills in candidates who need to cover each vacancy, and assessment of the precise dedication for the good performance of their duties.

«The remuneration Committee, it shall, among other functions, the ensure the observance of the remuneration policy established by the company, as well as the proposal to the Board of Directors of the remuneration policy of Directors and senior managers, Executive Directors individual remuneration and other conditions of their contracts and basic contracts of senior executives conditions.»

First additional provision. Exception to the obligation to make a public tender offer in restructuring or integration processes.

Who reaches the control of a listed company as a result of processes of restructuring or integration within the framework of the Royal Decree-Law 9/2009, of 26 June, on bank restructuring and reinforcement of the resources of institutions of credit, or the direct intervention of a deposit guarantee fund of credit institutions shall not be obliged to make a public tender offer on the terms provided for in article 60 of the law 24/1988, of July 28, the stock market and its implementing regulations, when such actions are carried out with financial support from the Fund for orderly bank restructuring or the deposit guarantee fund.

This provision shall apply to takes control in listed companies arising from the compliance of restructuring or integration agreements concluded after the entry into force of the Royal Decree-Law 9/2009, of 26 June, on bank restructuring and reinforcement of the resources of credit institutions.
Second additional provision. Certain cases of are not subject to temporary limitations in activity of newly created institutions.

Newly created banks subsidiaries of a credit institution domiciled in the EU are not subject to temporary limitations established to the activity of new banks.

The provisions of the preceding paragraph shall also apply to credit unions and banks of new creation consisting of one or more credit institutions in order to pass them your financial activity in the framework of the Constitution of an institutional system of protection or provided for in articles 5 and 6 of the Royal Decree-Law 11/2010 9 July, governing bodies and other aspects of the legal regime of the savings banks.

Third additional provision.

In those institutional protection systems under the letter d) paragraph three of article 8 of the law 13/1985, of 25 may, which has provided the central entity ownership of all assets and liabilities to the respective banking members savings banks, or that through its central entity several boxes of savings in a way concerted exercise exclusively its object as entities of (((credit, as provided for in the fourth paragraph of article 5 of Royal Decree-Law 11/2010 of 9 July, governing bodies and other aspects of the status of savings banks, shall be accomplished as provided for in paragraphs iii) and iv) of the letter d) of paragraph 3 of article 8 of the aforementioned law.

Fourth additional provision. Certain cases accession to the deposit guarantee funds.

Credit institutions participated mainly by another credit institution from different legal nature, adhere to the deposit guarantee fund to which belongs the latter from the moment heritage on its financial activity appropriate mainly from a previous transfer of assets and liabilities of an entity integrated in the same deposit guarantee fund.

In addition, the Minister of economy and finance may establish other cases in which by reason of their specific characteristics or because of their economic dependence on a credit institution must adhere to a deposit guarantee fund different from that corresponding by their legal nature.

As provided for in the first paragraph of this provision will produce effects from December 31, 2010.

Fifth additional provision.

Without prejudice to the powers of legal and bylaws conferred on the General Assembly, the articles of Association of the savings may determine that the Board of Directors, as a body that in accordance with article 13 of law 31/1985, of regulation of the basic rules on governing bodies of the savings banks, has entrusted the Administration and financial management of the entity for the fulfilment of its purposes It shall have the jurisdiction to approve, in his case, box agreements relating to its participation in the Bank through which to develop, where appropriate, its activity as a credit institution.

First transitional provision. Compliance with the requirements of capital strategy.

1 consolidated groups of credit institutions, as well as credit institutions not integrated in a consolidatable group of credit institutions shall comply with the provisions relating to capital requirements main paragraphs first and second article 1 of the present Royal Decree-Law before March 10, 2011. For the purposes of the verification of compliance with that set out in that article it attend the turnover of assets weighted by risk corresponding to December 31, 2010.

For verification of compliance with the provisions of that article after that date must be done during the year 2011, the number of assets weighted by risk deemed not less to corresponding to December 31, 2010.

However, this latter figure may be adjusted by the effect of extraordinary operations involving sales firm of branch networks, of shares of strategic nature or a portfolio of credits or real assets, as well as the effect that may have variations in methodological in the calculation of resource requirements themselves who have the required authorization of the Bank of Spain.

As of December 31, 2011, and thereafter, the numbers of assets weighted by risk matching at all times in accordance with the rules applicable to credit institutions own resources will be considered.

2. those entities or consolidated groups of credit institutions lacking the 10 of March 2011 the number of main capital which is enforceable pursuant to article 1 shall have a period of 15 working days, from that date, to present at the Bank of Spain the strategy and timetable for compliance with the new requirements of capitalization. This strategy must be noted in the concrete measures that institutions projected use for the fulfilment of the above requirements by September 30, 2011. Such measures must be approved by the Bank of Spain in the period of 15 working days, who may require the inclusion of modifications or additional measures it considers necessary to ensure that the number of main callable capital.

3. in the case that the measures contemplated operations from those listed in the third subparagraph of paragraph one, descents of assets weighted by risk arising from the implementation of such operations, for the purposes of the calculation of the main capital required will be considered. To do so, before September 1, 2011, the entity shall notify the Bank of Spain the terms in which finally reported measures have been executed and the Bank of Spain will verify whether those operations, under the terms that have been executed, meet the conditions established in this provision so that they are taken into account for the purpose of modifying the assets weighted by risk to determine the number of required principal. In any case, entities that choose to carry out these operations must contemplate, also in its compliance with the requirements of capital strategy, alternative measures to the assumption that such operations will not eventually run. These alternative measures the application for financial support to the Fund for orderly bank restructuring, may include as entity responsible for managing the processes of restructuring of institutions of credit and strengthening of its own resources pursuant to the provisions of the Real-Decreto law 9/2009, of 26 June, on bank restructuring and reinforcement of the resources of credit institutions.

In the event that the plan of compliance referred to in this article include uptake of third-party resources, must be given also alternative measures to the assumption that these resources will not finally obtained. Such alternative measures may include the application for financial support to the Fund for orderly bank restructuring.

In the case that the entity or consolidatable group of credit institutions in question not consider viable alternative to achieve the principal that it is it chargeable to that apply for public financial support, thus he shall state in the strategy of compliance with the requirements of capital that the Bank of Spain and the Fund for orderly bank restructuring will provide the additional resources needed. Entities or consolidated groups of entities that are in this situation will have a period of one month since they presented the strategy of capital requirements before the Bank of Spain to present the recapitalization plan to which refers article 9 of Royal Decree-Law 9/2009, of 26 June on bank restructuring and reinforcement of the resources of credit institutions.

In the case that the measures envisaged include a request, either immediate or subject to condition of financial support to the Fund for orderly bank restructuring, the Bank of Spain will inform this circumstance Fund that may compromise the provision of the resources requested under the condition that the paperwork and regulation requirements are met.

4. subject to the provisions of the second paragraph of this article, authorities implemented measures before September 30, 2011. However, if, due to issues related to the operations and procedures to be carried out and their corresponding deadlines, some entity includes do not run such measures within the aforementioned period, you must notify the Bank of Spain, at least 20 days prior to that date justifying the reasons for the delay. The Bank of Spain in response to the reasons and circumstances set forth by the entity and, always and when according to provided supporting documentation it considers that it is reasonably foreseeable that the measures envisaged in the Plan of implementation are going to carry out, may grant a postponement of the deadline to implement the measures. This deferment can never be more than three months.
For processes of admission to trading of shares, you must at least have a plenary body or competent authority agreement to that effect in the CA that shall serve as a basis for the application for admission, with a detailed implementation timetable, and have been awarded to one or several directors entities the mandate refers to that article 35 of the Royal Decree 1310 / 2005 , 4 November, whereby law 24/1988, of July 28, the stock market, is partially developed in matters of admission to trading of securities on official secondary markets, of public offers of sale or subscription. In this case the Bank of Spain may extend the deadline of execution on an exceptional basis until the first quarter of the year 2012.

5. without prejudice to the provisions of article 3 of the Royal Decree-Law, non-compliance with the obligations laid down in this provision will be establishing very serious infringement and sanctioned in accordance with the provisions of the Law 26/1988, of July 29, discipline and intervention of credit institutions.

The restrictions provided for in paragraph 3 of article 1 and the penalties collected in article 3 shall not apply to entities until has been performed, in the terms provided in this provision, compliance strategy.

(6. institutions integrated into an institutional system of protection pursuant to the provisions of article 8.3. d) Law 13/1985, of 25 may, coefficients of investment, resources and obligations of information of financial intermediaries should play, at the individual level, agreements that requires the fulfillment of the strategy and timetable for recapitalization.

7. the marketing of securities pursuant to the provisions of this article will occur, in any case, in accordance with the criteria established the National Commission of the stock market to ensure the adequate protection of investors. In addition, in the event that a part of the broadcast is marketed among the retail clientele, will require the application for admission to trading on an official secondary market.

Second transitional provision. Preferred in circulation regime.

The preferred shares whose subscription had been agreed by Fund for orderly bank restructuring prior to the entry into force of the present Royal Decree-Law will be governed according to the regime at the time of your subscription or on the date on which such subscription was agreed by the Fund, as well as by conditions and commitments of the respective deed emission.

In the event that these shares had been issued directly by a box of savings and, subsequently, transferred its financial activity to a bank in accordance with the provisions of articles 5 or 6 of the Royal Decree-Law 11/2010, from July 9, of governing bodies and other aspects of the legal regime of the savings banks the convertibility of them is understood to refer to actions of the Bank that it transferred its financial activity.

Third transitional provision. Computability as principal of certain mandatory convertible debt instruments.

1 debt instruments issued prior to the entry into force of the present Royal Decree-law with clauses under which are compulsorily convertible into ordinary shares by December 31, 2014 will integrate the principal laid down in article 2 of this Royal Decree.

2 debt instruments issued subsequent to the entry into force of the present Royal Decree, with clauses under which are compulsorily convertible into ordinary shares, will integrate the principal laid down in article 2 of this Royal Decree-Law provided that they fulfil the following conditions: to) provide for its mandatory conversion at the latest on December 31, 2014 or , before that date, in the case of sanitation or restructuring of the company or its group;

(b) the conversion ratio is determined at the time of the issuance of debt instruments;

(c) the issuer may, at its discretion, decide at any moment non-payment of the accrued coupon whenever required by your situation of solvency or its group;

(d) does not contain any feature that prevents its registration as an instrument of capital within the equity of the entity; (and e) marketing is carried out in accordance with the criteria established the National Commission of the stock market to ensure the adequate protection of investors and, in particular, the effectiveness of the conversion ratio proposed investors. In addition, in the event that a part of the broadcast is marketed among the retail clientele, will require the application for admission to trading, both the debt instrument and the title of capital, in an official secondary market.

Contracts or corresponding issuing brochures, as well as any modification of its characteristics, will be sent to the Bank of Spain in order to qualify their Computability as principal.

3. for the exclusive purposes of the fulfilment of the principal requirements demanded in the present Royal Decree-Law, the instruments referred to in this provision not may represent more than 25% of the principal as defined in article 2.

Fourth transitional provision. Transitional regime of the recapitalization of entities operations.

The Fund for orderly bank restructuring may purchase securities issued by credit institutions which, in the entry into force of this Royal Decree, without incurring the circumstances of article 6 of the Royal Decree-Law 9/2009 June 26, have initiated the negotiation to the effect of request to fund its acquisition for the reinforcement of its own resources.

These acquisitions may refer to convertible preferred shares in shares or participation quotas and shall apply mutatis mutandis the regime laid down in article 10 of the Royal Decree-Law 9/2009, of 26 June.

Sole repeal provision. Repeal legislation.

Any other rules of equal or lower rank in what is contrary to the provisions of this Royal Decree-Law shall be repealed.

First final provision. Modification of the Royal Legislative Decree 4/2004, of 5 March, which approves the revised text of the law of corporation tax.

One. With effects for the tax periods started as of January 1, 2011, amending article 67 text consolidated corporate tax law, approved by Royal Legislative Decree 4/2004, of 5 March, which is worded as follows: «article 67. Definition of the tax group. Parent company. Subsidiaries.

1 the set of anonymous, limited and audited companies by shares, means tax group as well as credit institutions referred to in paragraph 3 of this article, resident in Spanish territory comprising a parent company and all subsidiaries of this.

2 refers to dominant society that meets the following requirements: to) have one of the legal forms set forth in the preceding paragraph or, failing that, have legal personality and be subject and not exempt to corporation tax. Permanent establishments of entities not resident in Spanish territory can be considered dominant societies with regard to societies whose holdings are affected to the same.

(b) having a direct or indirect holding, at least 75 per 100 of the capital stock of one or more other companies the first day of the tax period in which is this regime of taxation, or, at least, 70 by 100 of the share capital, whether it's companies whose shares are admitted to trading on a regulated market. This last percentage shall also apply when shares indirect in other societies have provided that this percentage is reached through subsidiaries whose shares are admitted to trading on a regulated market.

(c) that such participation is maintained during the entire tax.

The requirement of maintenance of participation during the entire tax will not be payable in the event of dissolution of the investee entity.

(d) that is not dependent on any other resident in Spanish territory, which meets the requirements to be considered dominant.

(e) that it is not subject to the special regime of economic interest groupings, Spanish and European, and temporary unions of companies.

(f) that, in the case of permanent establishments of non-resident in Spanish territory entities, such entities are not dependent on any other resident in Spanish territory which meets the requirements to be considered dominant and reside in a country or territory with which Spain has signed an agreement to avoid double international taxation containing clause of exchange of information.

3 means dependent society one in which the parent company own participation that meets the requirements contained in paragraphs b) and (c)) of the previous paragraph.
Will also have this same consideration of credit institutions that are integrated into an institutional system of protection referred to in point (d)) of paragraph 3 of article 8 of law 13/1985, of 25 may, investment coefficients, own resources and obligations of information of financial intermediaries, provided that the central system entity siempre que la entidad central de el sistema forme form part of the tax group and is 100 percent implementation in common outcomes of the entities members of the system and the mutual commitment of solvency and liquidity among entities to reach 100 per cent of own resources account for each one of them. They will be considered fulfilled such requirements in those institutional protection systems whose central entity, directly or indirectly, through several boxes of concerted savings exercise exclusively its object as credit institutions, as provided for in paragraph 4 of article 5 of Royal Decree-Law 11/2010 of 9 July, governing bodies and other aspects of the legal regime of the savings banks.

4 may not be part of the tax groups entities in which any of the following circumstances concur: to) who are exempt from this tax.

(b) that at the end of the tax period are in a situation of competition, or falling on the patrimonial situation referred to in article 260.1.4. of the text revised of the Corporations Act, approved by Royal Legislative Decree 1564 / 1989, of December 22, even though they did not have the form of joint-stock companies, except that prior to the conclusion of the year in which annual accounts are approved this last situation had been surpassed.

(c) the subsidiaries that are subject to corporate income tax at a rate of assessment different from the dominant society.

d) the subsidiaries whose participation is achieved through another company that it does not meet the requirements to form part of the tax group.

(e) the subsidiaries whose financial year, determined by imperative legal, can not adapt to the dominant society.

5. the Group shall terminate when the parent company loses that character.

Two. With effects for the tax periods started as of January 1, 2011, added the transitory provision thirty third text consolidated from corporation tax law, approved by Royal Legislative Decree 4/2004, of 5 March, which is worded in the following way: «thirty third transitional provision. Regime of fiscal consolidation of the groups formed by credit institutions of an institutional system of protection and of the resulting groups of the indirect exercise of the financial activity of savings banks.

1 to the purposes of the tax consolidation regime established in Chapter VII of title VII of this Act, the Constitution of groups whose parent company is the central institution of an institutional system of protection referred to in point (d)) of paragraph 3 of article 8 of the law 13/1985, of 25 may (coefficients of investment, resources and obligations of information of financial intermediaries, shall take into consideration the following specialties: to) this procedure may be applied from the beginning of the tax period corresponding to the financial year 2011 or, if later, since the beginning of the tax period in which constitute the institutional system of protection. Communication by the application of the arrangements referred to in article 70 of this law, and the option will be held within the period that ends on the day that concludes that tax period.

Will be included in the group in the same tax period societies which fulfil the conditions laid down in article 67.2. a) of this law, whose representative of its equity holdings had brought the central entity in compliance with the plan of integration of the system and that entity hold participation until the conclusion of this tax period, through operations benefiting from the fiscal regime established in Chapter VIII of title VII of this Act or the regime established in article 7.1 of Royal Decree-Law 11/2010 of 9 July, governing bodies and other aspects of the legal regime of the savings banks, and would have consideration of subsidiaries of the credit institution contributing, as a result that this last entity paid in this special scheme as a dominant society.

((b) when credit institutions that are integrated as dependent companies in the tax group whose key is the central entity, they were taxed in the regime of fiscal consolidation as dominant, even when those groups become extinct, not deletions referred to in the letter will be added to) of article 81.1 of this law, that correspond to operations carried out by entities that are integrated into one other group as subsidiaries. Deleted results will be incorporated into the taxable income of that other tax group in the terms established in article 73 of this law.

(c) the outstanding carryforwards compensate for credit institutions which meet the conditions laid down in the second subparagraph of paragraph 3 of article 67 of this law, which are integrated as subsidiaries in the fiscal group whose key is the central entity, they may be compensated in the taxable income of the group, in the terms established in article 74.2 of the Act with the limit of the individual tax base of the central entity or of the Bank which, in turn, the central entity has provided all its financial business, subject to cases of savings and, where appropriate, the central entity, subsequent to the contribution, not to develop economic activities and their incomes are limited to yields from shares in the share capital of other entities involving. Such treatment will not be affected by the fact that the contribution of the financial business does not include certain assets and liabilities as a result of the existence of any condition that hinders the contribution.

The above shall apply even in the event that the Bank is excluded from the group in which the dominant is the central entity, even in the event of termination of the same.

(d) the outstanding fee deductions apply for credit institutions which meet the conditions laid down in the second subparagraph of paragraph 3 of article 67 of this law, they are integrated as subsidiaries in the fiscal group whose key is the central entity, they may deduct in full share of that tax group with the limit which would have corresponded in the single tax regime to the central entity or the Bank to that, in turn, the central entity has provided all its financial business, subject to cases of savings and, where appropriate, the central entity, subsequent to the contribution, not to develop economic activities and their incomes are limited to yields from shares in the share capital of other entities involving. Such treatment will not be affected by the fact that the contribution of the financial business does not include certain assets and liabilities as a result of the existence of any condition that hinders the contribution.

The above shall apply even in the event that the Bank is excluded from the group in which the dominant is the central entity, even in the event of termination of the same.

(e) where assets and liabilities are transmitted to the central entity by credit institutions as subsidiaries of the group whose key is the central entity, as a result of the establishment and expansion of the institutional system of protection, having conducted that transmission through operations benefiting from the fiscal regime established in Chapter VIII of title VII of this Act or to the regime established in article 7.1 of Royal Decree-Law 11/2010 9 July, governing bodies and other aspects of the legal regime of savings banks, prior to such transfer generated income attributable to those assets and liabilities, they shall be charged to the central entity in accordance with commercial standards.

(Provisions of the letters c) and (d)) above will also be of application in the event that after the establishment of the institutional system of protection, the central entity go to be regarded as dependent on another group that tribute in the tax consolidation system.

2. for the purposes of the application of the fiscal regime established in article 7.2 of the Royal Decree-Law 11/2010, July 9, of governing bodies and other aspects of the status of savings banks, both the fiscal regime established in Chapter VIII of title VII of this Act which have received transmissions of assets and liabilities between credit institutions in compliance with the agreements of an institutional protection system the non-integration of incomes referred to both tax regimes shall include, where applicable, deletions that would have to be incorporated into the base of the tax group result of those transmissions, on the assumption that such assets and liabilities are part of the heritage of entities in a group that would be taxed according to the regime of fiscal consolidation.
3. in the case of indirect exercise of financial activity of the savings banks in accordance with article 5 of Royal Decree-Law 11/2010, from July 9, of governing bodies and other aspects of the status of savings banks, caja de ahorros and the banking institution to which that contribution all its financial business , you can apply the tax consolidation system regulated in Chapter VII of title VII of this Act from the beginning of the tax period corresponding to the period in which occurs this contribution, provided that the requirements laid down for this purpose in article 67 of this law. Communication by the application of the arrangements referred to in article 70 of this law, and the option will be held within the period that ends on the day that concludes that tax period.

The introduction of this system shall take into consideration the following specialties: to) will be included in the group in the same tax period societies which fulfil the conditions laid down in article 67.2. to) of this law, whose representative of its equity holdings had provided to the Bank and this institution holds participation until the conclusion of that tax period , through operations benefiting from the fiscal regime established in Chapter VIII of title VII of this Act, and would have consideration of subsidiaries of caja de ahorros contributor, as a result that this last entity paid in this special scheme as a dominant society.

b) pending compensate for caja de ahorros contributor, carryforwards were not taxed in the regime of fiscal consolidation as dominant, can be compensated in the tax base of the group, with the limit of the individual taxable income of the Bank, in the terms established by article 74.2 of the Act, on condition that the caja de ahorros subsequent to the contribution, not to develop economic activities and their incomes are limited to yields from shares in the share capital of other entities involving. Such treatment will not be affected by the fact that the contribution of the financial business does not include certain assets and liabilities as a result of the existence of any condition that hinders the contribution.

The above shall apply even in the event that the Bank is excluded from the group in which the dominant is caja de ahorros, even in the event of termination of the same.

(c) the outstanding fee deductions applied by the caja de ahorros contributor, was or not taxed in the regime of fiscal consolidation as dominant, they may deduct in full the tax group share with the limit that would have corresponded to the Bank in the single tax regime, on condition that the caja de ahorros subsequent to the contribution, not to develop economic activities and their incomes are limited to yields from shares in the share capital of other entities involving. Such treatment will not be affected by the fact that the contribution of the financial business does not include certain assets and liabilities as a result of the existence of any condition that hinders the contribution.

The above shall apply even in the event that the Bank is excluded from the group in which the dominant is caja de ahorros, even in the event of termination of the same.

(d) when the contribution of the financial business all graded operations benefiting from the fiscal regime established in Chapter VIII of title VII of this Act, the incomes generated prior to the contribution attributable to those assets and liabilities, shall be charged to the Bank in accordance with commercial standards.

4. when, in the case of the groups referred to in paragraphs 1 and 3 above that are taxed in the tax consolidation system, remain excluded from them the Bank through which savings banks undertake the indirect exercise of their financial activity or that had brought all its financial business, even in the cases of extinction of the referred tax group ((, set out in the letter to) the article 81.1 of this law shall apply with the following specialties: to) if the Bank through which savings banks undertake the indirect exercise of their financial activity or to which had brought all its financial business, maintained holdings in entities which satisfy the conditions laid down in article 67.3 of this law the Bank and its investments qualifying for this may apply the regime of fiscal consolidation since the beginning of the tax period in which such exclusion takes place. Communication by the application of the arrangements referred to in article 70 of this law, and the option will be held within the period that ends on the day that concludes that tax period. In this case, deleted results will be added to the taxable income of that other tax group in the terms established in article 73 of this law, provided that are integrated into this group entities involved in operations that have generated such results.

(b () compliance with provisions in the letter to), but are not inserted in said group entities involved in operations that have generated the results deleted, such results will be incorporated in the terms established in article 73 of this law, in the base of the persistent group in which the income that was generated at the time, object disposal, provided that both the entity which is not part of the tax group to which the Bank belongs, and this last entity forming part of a group referred to in article 42 of the code of Commerce in which the dominant is the central entity of an institutional system of protection or the savings that , in both cases, have brought all its financial business to the Bank.

3. With effects for the tax periods initiated starting from 1 January 2010, added the transitory provision thirty fourth text consolidated from corporation tax law, approved by Royal Legislative Decree 4/2004, of 5 March, which is worded in the following way: «thirty fourth transitional provision. Taxation in the year 2010 the members of an institutional system of protection of credit institutions.

For the sole purpose of determining the taxable income of the tax period for the 2010 year of savings and the central entity boxes of an institutional system of protection that has been constituted in this exercise, in the terms established in the letter d) of paragraph 3 of article 8 of the law 13/1985, of 25 may Coefficients of investment, resources and obligations of information of financial intermediaries, as long as 100 percent implementation in common system entities results and that the mutual commitment of solvency and liquidity among entities will reach 100 per cent of Computable for each one of them own resources shall have the consideration deductible expense and income computable, as appropriate, in savings banks and the central entity, those costs and revenues accounted by such entities as a result of the implementation in common system entities results.

Second final provision. Extension of the regime of social administrators.

They shall apply to the members of the Board of Directors of savings banks the duties of social administrators established in the articles 225 to 232 of the revised text of the companies act of Capital, approved by Royal Legislative Decree 1/2010 of 2 July.

Third final provision. Schools of development.

Enables the Bank of Spain to adopt the provisions necessary for the definition of the concept of wholesale financing laid down in article 1.2. a) of the present Royal Decree-law.

Fourth final provision. Competence titles.

With the exception of the first final provision, the present Royal Decree-law is dictated in accordance with the provisions of article 149.1.6., 11th and 13th of the Spanish Constitution, which attributes to the State competition on commercial law, bases of management of credit, banking and insurance and bases and coordination of the general planning of economic activity, respectively.

The first final provision is issued under cover of the provisions of article 149.1.14. ª of the Spanish Constitution, which attributes to the State exclusive jurisdiction over General Finance and government debt.

Fifth final provision. Entry into force.

This Royal Decree shall enter into force the day following its publication in the "Official Gazette".

Given in Madrid, February 18, 2011.

JUAN CARLOS R.

The President of the Government, JOSÉ LUIS RODRÍGUEZ ZAPATERO