JOHN CARLOS I

KING OF SPAIN

To all who present it and understand it.

Sabed: That the General Courts have approved and I come to sanction the following law.

PREAMBLE

I

The prudential supervision of credit institutions seeks to guarantee the stability of the Spanish financial system, preventing the emergence of crises among those entities that make up their fabric. The ultimate reason for this precautionary policy lies in the particular importance which, for the proper functioning of the economy, has the role played by credit institutions in channelling savings towards investment.

In addition to the use of other instruments, the requirement for minimum levels of own resources, technically adjusted to their real needs and risks, is considered to be one of the main elements of control of the the solvency of credit institutions.

In a context of international financial markets, the regulation of credit institutions ' solvency cannot be exclusively national, as differences between regulations would create advantages and disadvantages. artificial in terms of competitiveness between the entities of different countries. Therefore, through international harmonisation projects, measures are being taken to converge on the prudential criteria for the requirements of own resources of the financial intermediaries of each country.

In the framework of the above mentioned projects, in 1988 the Basel Capital Agreement introduced a set of common rules for the calculation of the own resources requirements necessary to deal with the credit risk, with the basic objective of ensuring the competitive equality and stability of the international banking system. While this model was originally only to be applied to the large internationally active banks, in practice it was imposed as a basis for the regulation of credit institutions ' solvency in more than 100 countries. In particular, the European Union adopted Directive 2000 /12/EC which dealt with the risks to the institutions due to its lending activity, and Directive 93 /6/EEC on the capital adequacy of investment firms and the credit institutions.

Despite the fact that the Basel Agreement of 1988 gave simple and appropriate answers to the moment, almost twenty years ago, it has been perceived that it has not been adapted to the measurement and risk management of a financial sector that, gradually, it has been introducing new and ever more sophisticated procedures and systems.

Therefore, the necessary review was addressed at international level with the New Basel Capital Agreement of 2004, which was subsequently incorporated into the acquis communautaire through Directive 2006 /48/EC of the European Parliament. and the Council of 14 June 2006 on the taking up and pursuit of the business of credit institutions (recast) and Directive 2006 /49/EC of the European Parliament and of the Council of 14 June 2006 on the adequacy of the capital of investment firms and credit institutions (recast). The first of these two Directives is that which is partially transposed into the Spanish legal order by means of this Law.

The new Directive 2006 /48/EC seeks to approximate the risk measurement carried out by the supervisor to the institutions ' own measurement mechanisms, recognising, in turn, that the treatment of bank solvency should consist of in more than just the setting of a minimum own resources ratio, and stimulating the development of appropriate internal risk management procedures. In this way, the fundamental objectives of ensuring a sufficient level of solvency and achieving a competitive equality between banks are added to make the regulatory capital required more sensitive to the real risks and to encourage a better risk management by entities.

With these objectives, both the New Basel Capital Agreement and Directive 2006 /48/EC, have developed a set of structured measures on the basis of three mutually reinforcing pillars. Each of these pillars represents a different approach to supervision: the former emphasizes the adoption of uniform rules and determines the minimum requirements for own resources; the second one puts in place a whole system of review In order to promote the improvement of the internal management of the risks of the institutions, the third party responds to the disciplinary effect of the market scrutiny, obliging the entities to disclose to this information about the key aspects of your business profile, risk exposure and forms of risk management.

II

This Law addresses the strict transposition of the aforementioned Directive 2006 /48/EC. This is, however, a partial transposition in so far as the technical specification of a good part of the Community standard makes it necessary to complete the transposition process in lower-ranking provisions.

The sole article of this Law contains the modifications made in Law 13/1985, of 25 May, of coefficients of investment, own resources and obligations of information of the financial intermediaries. Firstly, the heading of Title II of that Law is amended to bring it more into line with its new content. In this way, it goes from being called the "solvency ratio and limitations to the activity of credit institutions for solvency reasons", to be called " Minimum own resources and limitations to the activity of credit institutions for reasons of solvency '. This change reflects the fact that the new implementation of the minimum required own resources regime goes far beyond the establishment of a mere coefficient.

As far as the minimum requirements of the credit institutions ' own resources are concerned and in the face of the previous wording of the Law, which left the regulatory development with the determination of the classes of risk to be covered, the The new article aims to establish, at legal headquarters, the broad guidelines prior to regulatory development, including a wider range of risks to be covered. In turn, the regulatory development of the methods of calculating these own resources requirements is foreseen. In particular, it will be the Bank of Spain that determines the conditions necessary to be able to use the most advanced risk measurement methods. The use of external credit ratings for some of these methods, carried out by companies recognised by the Banco de España, is permitted as a relevant novelty. Institutions are also required to implement internal capital adequacy assessment procedures.

Third, it refers to the broad set of powers that must enable the Banco de España to effectively implement the solvency rules of credit institutions contained in Law 13/1985. In particular, reference is made to the operation of supervision on a consolidated Community basis, both when it corresponds to the Banco de España, and when the Banco de España has an obligation to cooperate with the European Union supervisor, which This category is held. Finally, the disclosure obligations of the Banco de España itself are regulated in front of the public. Among the latter, the most important is the obligation to disclose periodically the criteria and methodologies that the Banco de España itself continues in the application of the new competences attributed to it by this Law.

In the fourth place, disclosure obligations are made to the public, especially the financial market stakeholders, which credit institutions will have to comply with. The annual publication of a document entitled "Information with a prudential relevance" shall be available. The minimum contents of this document will be set by the Banco de España to ensure that they are comparable between entities, but each of them must establish a formal policy of disclosure of information about their own solvency to the public. The Banco de España will protect the fulfilment of these disclosure obligations of credit institutions.

Finally, the Banco de España is granted new executive powers that, without prejudice to its sanctioning powers, will serve to exercise its discipline in respect of the fulfilment of the solvency obligations by the credit institutions.

III

Reasons for caution have led to the introduction of a transitional provision in this Law which provides for a lower limit to the minimum own resources requirements laid down in the Law, during the two years after its entry into force. effect. With these limits, it is intended to maintain a certain degree of prudence, since the difficulty of assessing the enormous changes in the calculations of the minimum own resources requirements that this Law and its development provisions will entail, could endanger the objective of financial stability if the own resources required of the institutions fell drastically after the entry into force of the new regulation.

This Law also has two final provisions designed to amend the Royal Decree of Law 1298/1986 of 28 June 1986 on the adaptation of the existing law in the field of credit institutions to that of the European Communities, and Law 26/1988, of 29 July, of discipline and intervention of the Credit Entities. In the first case, the aim is to introduce references to the necessary coordination of the Banco de España with other competent Community and non-Community authorities. In particular, the terms governing the exchange of information between competent authorities in the framework of supervision on a consolidated basis are specified. In the second case, the objective is to adjust the offending rates, the obligations of the institutions and the powers of the Banco de España to the whole of the new regulation on solvency. In particular, it highlights the new obligation for the exercise of the activities of credit institutions to have an appropriate organisational structure, with clearly defined, transparent and coherent lines of responsibility, which transpose the the obligation to be laid down in Directive 2006/48, such as the requirement to provide robust corporate governance procedures. In the case of infringements, serious and serious new types of offenders are created, linked to breaches of obligations relating to: the requirements of own resources, the deficiencies in the organisational structures or the mechanisms of internal control of the institutions, the breach of the duty to disclose prudential information or other non-compliance with specific policies required by the Banco de España.

Concludes the Law with the final disposition that establishes the competition titles under which it is approved, with which it enables the Government for its development, with which it informs the incorporation of the law by this Law, and with which it sets its entry into force on 1 January 2008.

Single item. Amendment of Law 13/1985 of 25 May of coefficients of investment, own resources and reporting obligations of financial intermediaries.

Law 13/1985 of 25 May, of investment coefficients, own resources and reporting obligations of financial intermediaries, is amended as follows:

One. The heading of the second title is worded as follows:

" TITLE SECOND

Minimum own resources and limitations on the activity of credit institutions for solvency reasons "

Two. Article 6 is worded as follows:

" 1. The consolidated groups of credit institutions, as well as the integrated credit institutions or not in a consolidated group of credit institutions, shall at all times maintain a sufficient volume of own resources in relation to the credit institutions. investments made and the risks assumed. In particular, they shall have at all times of funds greater than or equal to the sum of the following minimum own resources requirements:

(a) In respect of all of its activities other than those of the trading book, the own resources requirements determined in accordance with the calculation method laid down for the credit risk and the dilution risk;

(b) In respect of their trading book activities, the own resources requirements determined in accordance with the calculation method laid down in regulation for the risk of position, the risk of settlement and the risk of a counterparty and, in so far as it is authorised, for major risks exceeding the limits laid down in regulation;

(c) For all of its activities, the own resources requirements determined in accordance with the calculation method laid down in regulation for exchange rate risk and risk on commodities;

(d) For all of its activities, the own resources requirements determined in accordance with the calculation method laid down in regulation for operational risk.

2. The methods of calculating these own resources requirements, the weighting of the different investments, operations or positions, the possible surcharges for the risk profile of the institution and the techniques shall be determined. accepted for the reduction of credit risk.

The use of these external credit ratings purposes will require that the company that performs them has been recognized for this purpose by the Banco de España, in accordance with the criteria that it establishes for this purpose and valuing, in any case, objectivity, independence, transparency and continuous review of the methodology applied, as well as the credibility and acceptance in the market of the credit ratings made by the company. The authorisation of the Banco de España shall be required, subject to the conditions laid down by the Bank of Spain, in order to use internal credit ratings or internal methods of measurement of the operational risk and of the developed market risk for those purposes. by the entities themselves.

3. For the same regulatory procedure, maximum limits may be imposed on investments in immovable or other fixed assets, on shares and units, on assets, liabilities or positions in foreign currency, on the risks that may arise. contract with the same person, entity or economic group; and, in general, those transactions or positions that involve high risks for the solvency of institutions. The limits may be graduated according to the characteristics of the different types of credit institutions.

4. The consolidated groups of credit institutions, as well as credit institutions that are not integrated into one of these consolidable groups, will specifically have robust, effective and comprehensive strategies and procedures to assess and maintain on a permanent basis the amounts, rates and distribution of domestic capital that they consider appropriate to cover the nature and level of the risks to which they are or may be exposed. Those strategies and procedures shall be periodically subject to internal scrutiny to ensure that they remain exhaustive and proportionate to the nature, scale and complexity of the activities of the credit institution concerned. '

Three. Article 8 is worded as follows:

" 1. In order to comply with the requirements of own resources and, where appropriate, the limitations laid down in Articles 6 and 10, credit institutions shall consolidate their financial statements with those of other credit institutions and institutions. financial institutions which constitute a unit of decision. For the same purposes, credit institutions which do not have dependent entities shall draw up financial statements in which they apply similar criteria to those of consolidation if they have shares in the sense indicated in the first the paragraph of Article 47.3 of the Trade Code, or, directly or indirectly, at least 20% of the capital or voting rights in another financial institution.

All entities or companies that integrate the consolidable groups of credit institutions shall ensure that their systems, procedures and mechanisms are consistent, well integrated and are appropriate for the availability of the information necessary for compliance with the standards required for the group, as well as for the provision of any relevant data and information for supervisory purposes.

2. For the purposes of this Law, in order to determine whether several entities constitute a unit of decision, the criteria provided for in Article 4 of Law 24/1988 of 28 July of the Stock Market shall be met.

3. A group of financial institutions shall be deemed to be a consolidated group of credit institutions when any of the following circumstances arise:

(a) That a credit institution controls, in accordance with Article 42 of the Trade Code, the other entities.

(b) The parent entity is an entity whose principal activity is to have holdings in credit institutions.

(c) a company whose principal activity is to have holdings in financial institutions, a natural person, a group of natural persons acting systematically in concert, or a non-consolidated entity with under this Law, they control a number of financial institutions, at least one of them being a credit institution, and provided that credit institutions are the largest in relation to financial institutions, in accordance with the criteria to be set by the Minister for Economic Affairs and Finance.

4. The types of financial institutions to be included in the consolidated group of credit institutions referred to in the preceding number shall be determined.

In any case, they will be part of the consolidable group:

a) Credit institutions.

b) Investment services companies.

c) Capital Investment Companies Variable.

(d) The Management Companies of Collective Investment Institutions, as well as the Pension Fund Managers whose sole object is the administration and management of the aforementioned Funds.

e) The Corporate and Mortgage Securitization Fund Management companies.

f) Venture Capital Societies and Risk Capital Funds Managers.

(g) Entities whose principal activity is the holding of shares or units, except in the case of mixed financial holding companies subject to supervision at the level of financial conglomerate.

In addition, the consolidated group of financial instruments whose principal activity involves the extension of the business of any of the entities included in the consolidation, or includes the provision to those companies, shall also be part of the consolidated group. ancillary services.

5. The Banco de España may authorise or require the individual exclusion of a credit institution or a financial institution, which is a subsidiary or a participant, of the consolidated group of credit institutions, or of the participating entities to which it refers paragraph 1:

(a) Where the undertaking concerned is situated in a non-Member State of the European Union where there are legal obstacles to the transmission of the necessary information;

b) Where the undertaking concerned does not present a significant interest, in the opinion of the competent authorities, with regard to the objectives of the supervision of credit institutions and, in any event, where the total of the the balance sheet of the undertaking in question is lower than the lowest of the following two amounts: EUR 10 million or 1% of the total balance sheet of the parent undertaking of the group or the individual entity holding the holding;

(c) Where the consolidation of such an entity is inappropriate or liable to mislead from the point of view of the objectives of the supervision of that group.

Where, in the cases referred to in point (b), several undertakings meet the criteria referred to therein, they must nevertheless be included in the consolidation provided that the group of such undertakings has an interest significant with respect to the objectives.

6. For the purposes referred to in paragraph 1 of this Article, insurance institutions shall not be part of the consolidated groups of credit institutions.

7. Regulation may be regulated the way in which the rules laid down by this Law on own resources and supervision of the consolidated groups of credit institutions should be applicable to the sub-groups of credit institutions, those who, including entities of such nature, are in turn integrated into a larger group.

The way in which these rules will apply to credit institutions affiliated to a central body may be regulated, provided that it controls, directs, guarantees its obligations and meets the other requirements. requirements to be provided for.

Similarly, the mode of subgroup integration in the group can be regulated, and collaboration between the supervisory bodies.

8. Where foreign entities are eligible to be integrated into a consolidated group of credit institutions, the scope of supervision on a consolidated basis by the Bank of Spain shall be regulated, inter alia, in accordance with criteria, the Community or non-Community character of the entities, their legal nature and degree of control.

9. In order to comply with the obligation to formulate the consolidated accounts established by the Trade Code, when the accounting standards adopted by the European Commission regulations are not applied, the rules to be determined shall be used. in accordance with the procedure and criteria laid down in the first subparagraph of paragraph 1 of the following Article in groups of companies:

a) Cuya parent company is a credit institution;

(b) A dominant company has as its principal activity holding shares in credit institutions;

c) In which, including one or more credit institutions, the activity of credit institutions is the most important within the group. "

Four. Article 9 (4) is worded as follows:

" 4. The conditions under which the Banco de España may not demand individual compliance with the requirements of own resources for Spanish credit institutions integrated into a consolidated group of companies will be determined. credit institutions referred to in points (a) and (b) of Article 8 (3). Similarly, the Banco de España may adopt other measures to ensure an adequate distribution of own resources and risks between the entities that make up the consolidable group and, in any event, will monitor the individual solvency situation of the each of the credit institutions that integrate these groups. '

Five. Two new Articles 15 (a) and (b) are inserted as follows:

" Article 10a.

1. It shall be the responsibility of the Banco de España, as the authority responsible for the supervision of credit institutions and their consolidable groups:

a) Review the systems, be they agreements, strategies, procedures or mechanisms of any kind, applied to comply with the solvency regulations contained in this law and in the provisions that develop it;

b) Evaluate the risks to which they are or may be exposed; and

(c) From the review and assessment referred to in the preceding letters, determine whether the systems referred to in point (a) and the own funds held ensure sound management and coverage of their risks.

d) Develop and publish guides to supervised entities and groups, indicating criteria, practices or procedures, which it considers appropriate to encourage an appropriate assessment of the risks to which they are or may be be exposed as well as the best compliance with the standards of management and discipline of supervised subjects. Such guides may include the criteria that the Banco de España itself will follow in the exercise of its supervisory activities.

To this end, the Banco de España will be able to make its own, and transmit as such to the entities and groups, the guides that, on these issues, approve the international bodies or committees active in the regulation and supervision banking.

The analyses and assessments referred to in points (a) and (b) above shall be updated at least annually.

2. It shall be the responsibility of the Banco de España, as the authority responsible for the exercise of the supervision of the consolidated groups of credit institutions and in relation to the supervisory authorities of the European Union:

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

b) Plan and coordinate all supervisory activities in both normal and urgent situations, including in relation to the activities referred to in paragraph 1 of this Article.

(c) Co-operate closely with other competent authorities with supervisory responsibility over parent, subsidiary or participating foreign credit institutions of the same group in the terms provided for in Article 6. Royal Legislative Decree 1298/1986 of 28 June.

In particular, the Banco de España will cooperate with the aforementioned competent authorities in granting authorization for the use of internal credit ratings or internal methods of measurement of operational risk to apply in the Spanish groups of credit institutions and in the determination of the conditions, to which, where appropriate, it shall be subject.

The applications for authorisation referred to in the preceding paragraph, submitted by a parent credit institution of the European Union and its subsidiaries or, together, by the subsidiaries of a parent financial holding company The European Union shall address the Bank of Spain as the authority responsible for the exercise of the supervision of the consolidated groups of credit institutions.

In these cases, within a period of no more than six months, the Banco de España will promote the adoption of a joint decision on the application with the other competent authorities of other Member States in charge of the monitoring of the various entities integrated into the group. The reasoned decision setting out this joint decision shall be notified to the applicant by the Bank of Spain.

The period referred to in the preceding paragraph shall begin on the date of receipt of the complete application by the Bank of Spain. The Banco de España shall transmit such a request without delay to the other competent authorities.

In the absence of a joint decision between the Banco de España and the other competent authorities within six months, the Banco de España will decide on the request. The reasoned decision shall take account of the views and reservations of the other competent authorities expressed over the six-month period. The reasoned decision shall be notified to the applicant and to the other competent authorities of the Banco de España.

In the case of the equivalent procedure governing, as provided for in Directive 2006 /48/EC, of the European Parliament and of the Council of 14 June 2006 on access to the business of credit institutions and their exercise, the authorisations referred to above in the case of groups of foreign credit institutions in which a Spanish credit institution is integrated, the Banco de España, in addition to cooperating in the joint decision to adopt, may accept, where appropriate, the decisions taken by the competent authorities of other States in this respect; Members of the European Union when they are responsible for the exercise of the supervision of those groups. The Spanish entity concerned shall calculate its own resources requirements in accordance with that decision.

Reglamentarily, the terms of the cooperation procedure referred to in this letter may be specified.

(d) Subscribe to coordination and cooperation agreements with other competent authorities which aim to facilitate and establish effective supervision of the groups entrusted to their supervision and to undertake the additional tasks which result from such agreements.

(e) To warn, as soon as possible, the Minister of Economy and Finance, and the other supervisory, national or foreign authorities, affected, of the appearance, in a credit institution or within a group consolidating credit institutions, an emergency situation which may compromise the stability of the financial system of any Member State of the European Union in which entities of the group or in which they exist have been authorised branches of the affected entity or group.

3. The Banco de España will accumulate statistical data on the fundamental aspects of the application of the regulations of the management and discipline of the credit institutions contained in this Law and will disseminate periodically, at least on its website, the Following information regarding such regulations:

(a) The text of the laws, regulations and administrative provisions, as well as the guidelines adopted in this respect as the authority responsible for the control and inspection of credit institutions and their groups,

(b) The way in which the discretionary options and powers allowed to the Member States by the European Union directives relating to the rules referred to have been exercised in Spain,

c) The criteria and methodology followed by the Banco de España itself to review the agreements, strategies, procedures and mechanisms applied by credit institutions and their groups in order to comply with the regulations and to assess the risks to which they are or could be exposed. "

" Article 10b.

1. The consolidated groups of credit institutions and credit institutions which are not integrated into one of these consolidable groups shall make public, as soon as practicable, at least on an annual basis and duly integrated into a single document. referred to as "prudential relevance information", specific information on those data in its financial situation and activity in which the market and other interested parties may be interested in order to assess the risks to which it is face, your market strategy, your risk control, your internal organization and your situation to comply with the minimum requirements for own resources provided for in this Law.

The Bank of Spain shall determine the minimum information to be published in accordance with the preceding paragraph. In any event, institutions may omit information which is not of relative importance and, with the appropriate warning, the data they consider to be reserved or confidential; they may also determine the means, place and mode of disclosure of the cited document.

Except for this obligation to individual credit groups or entities controlled by other credit institutions or financial holding companies authorised or incorporated in another Member State of the European Union, except where an important credit institution is located between them, in accordance with the criterion that the group's consolidated supervisory authority has communicated to the Bank of Spain, be in the latter's view of its attention to its activity in Spain or its relative importance within the group.

To those same effects, groups and entities shall adopt a formal policy for the fulfilment of such disclosure requirements, the verification of the adequacy and accuracy of the data disclosed and the frequency of their disclosure. disclosure, and shall have procedures in place to assess the adequacy of such policy.

The same disclosure obligations shall be payable, individually or on a sub-consolidated basis, to Spanish or foreign credit institutions incorporated in another Member State of the European Union, subsidiaries of credit institutions. In cases where the Banco de España considers it to be in the interest of its activity or relative importance within the group. In the event that the obligation affects foreign subsidiaries, the Banco de España will forward the corresponding resolution to the dominant Spanish entity, which will be required to take the necessary measures to give it effective compliance.

2. With the exception of the authorisation of the Banco de España, the disclosure, in compliance with the market or securities requirements, of the data referred to in paragraph 1, shall not exempt from its integration in the manner provided for in that paragraph.

3. For institutions required to disclose the information referred to in paragraph 1, the Banco de España may require them to:

(a) The verification by independent auditors or experts, or by other means satisfactory to their judgement, of any information not covered by the audit of accounts,

(b) to disclose one or more of these information, either independently at any time, or at a frequency higher than the annual rate, and to set maximum deadlines for disclosure,

c) To be used for the disclosure of means and locations other than financial statements. "

Six. Article 11 is worded as follows:

" 1. Where a credit institution or a consolidated group of credit institutions does not reach the minimum level of own resources laid down in Article sexto.1 or the additional levels required by the Bank of Spain in accordance with the provisions of the provided for in paragraph 3, the institution, or each and each of the consolidated entities, shall allocate to the formation of reserves the percentages of their liquid profits or surpluses which they shall regulate, subject to such its distribution to the prior authorisation of the Banco de España.

The authorization shall be deemed to have been granted if one month after the receipt by the Bank of Spain of the timely request, no express resolution has been produced.

2. A credit institution or a consolidated group of credit institutions which infringes any limitations which may be established pursuant to Article 6 (3) shall, in accordance with the conditions laid down in the rules laid down in this Regulation, adopt measures necessary to return to compliance with the violated rules.

3. Irrespective of the provisions of paragraphs 1, 4, 5 and 6, and for the same purpose as provided for in paragraph 2, the Banco de España may, where a credit institution does not comply with the requirements of this Title, or other rules of management and discipline that determine the minimum requirements for proper own resources or organisational or internal control structure, including, inter alia, the following measures:

(a) obliging credit institutions and their groups to maintain their own resources in addition to those required at a minimum.

The Banco de España must do so, at least, whenever it appreciates serious deficiencies in the organizational structure or in the procedures and mechanisms of internal control, including in particular those mentioned in article sexto.4 of this law, or whenever it determines, in accordance with the provisions of Article 10.bis.1.c) that the systems and the own funds held referred to in that provision do not ensure sound management and coverage of the risks. In both cases the measure must be taken when the Banco de España considers it unlikely that the mere implementation of other measures will improve such deficiencies or situations within an appropriate time frame.

b) Require credit institutions and their groups to strengthen the procedures, mechanisms and strategies adopted for the fulfilment of these requirements.

(c) Require credit institutions and their groups to implement a specific policy, either for the provision of provisions, or for other types of treatment for assets subject to weighting for the purposes of the capital, or risk reduction inherent in its activities, products or systems.

d) Restrict or limit the entities ' businesses, operations, or network.

4. Savings banks shall be required to allocate, at least 50% of that part of the surplus of free disposal which is not attributable to the quota-holders, to reserves or provident funds which are not attributable to specific risks. This percentage may be reduced by the Banco de España when the own resources exceed the established minima by more than one third.

5. The Minister for Economic Affairs and Finance, acting on a proposal from the Bank of Spain and after consulting the authorities responsible for monitoring the social welfare of savings banks, may, by way of exception, authorise the application of percentages of the stock of reserves lower than the figure in the preceding number 4, or to those established according to the number 1 of this Article, where the investment or maintenance of previously authorised social works, or in collaboration, could not be met with the fund for the benefit-social work that would result from the application of the numbers quoted. In such cases, these boxes may not include investments in new, own or collaborative works in their budgets.

6. The provisions of numbers 1, 2 and 3 above are without prejudice to the application of the penalties provided in each case according to Law 26/1988 of 29 July of the discipline and intervention of the Credit Entities. "

Seven. Article 12 (1) is worded as follows:

" 1. Where, in a consolidated group of credit institutions, there are other types of financial institutions subject to specific own resources requirements, the group shall, for the purpose of sufficiency of such resources, be the highest of the financial institutions. The following measures:

(a) The necessary to meet the requirements of own resources to be established in accordance with the provisions of Article sexto.1.

(b) The sum of the own resources requirements established for each class of group members, calculated individually or on a sub-consolidated basis, according to their specific rules. "

First transient disposition. Transitional arrangements.

1. For the first and second periods of 12 months after 31 December 2007, credit institutions or consolidable groups of credit institutions using internal credit risk ratings shall maintain their own resources. which shall be at all times equal to or greater than the amounts indicated in paragraphs 3 and 4 of this provision.

2. During the second period of 12 months after 31 December 2007, credit institutions or the consolidated groups of credit institutions using the internal operational risk measurement methods shall maintain own resources which are be at all times equal to or greater than the amounts referred to in paragraphs 3 and 4.

3. For the first 12-month period provided for in paragraph 1, the amount of own resources shall be 90% of the total amount of the minimum own resources which would be required by the institution or group to keep the current regulation at 31 December 2007.

4. For the second 12-month period referred to in paragraph 1, the amount of own resources shall be 80% of the total amount of the minimum own resources which would be required by the institution or group to maintain the current rules of December 31, 2007.

5. Compliance with the requirements of paragraphs 1 to 4 shall be based on the amounts of fully adjusted own resources so that they reflect the differences between the calculation of own resources in accordance with the rules in force at 31 December and the calculation of own resources in accordance with this law and its development provisions, differences arising from treatment separately from expected losses and unexpected losses.

Second transient disposition. Transitional arrangements for certain emissions.

As provided for in paragraph 5 of the second provision of Law 13/1985 of 25 May 1985 on investment ratios, own resources and information obligations of financial intermediaries, as regards the securities listed on markets organised and issued by mortgage-backed securities, regulated by Law 19/1992 of 7 July on the arrangements of companies and funds for real estate investment and on mortgage-backed securities, and to the asset-securitisation funds regulated by the fifth additional provision of the Act In the case of the second banking coordination Directive, the Spanish legislation on credit institutions is adapted and other changes relating to the financial system are introduced, and will also apply to the second banking coordination Directive. the emissions of those securities listed on organised markets prior to the entry into force of Law 23/2005 of 18 November of tax reforms for the boost to productivity.

Repeal provision.

As of the entry into force of this Law, all provisions of equal or lesser rank shall be repealed.

Final disposition first. Amendment of Royal Decree 1298/1986 of 28 June 1986 on the adaptation of the law in force in the field of credit institutions to that of the European Communities.

Royal Decree 1298/1986 of 28 June 1986 on the Adaptation of the Law in force in the field of Credit Institutions to the European Communities is amended as follows:

One. Article 6 (1) is worded as follows:

" 1. In the exercise of its supervisory and inspection duties on credit institutions, the Banco de España shall cooperate with the authorities entrusted with similar tasks in foreign countries and may communicate information relating to the the management, management and ownership of these entities, as well as those which may facilitate the solvency control of these entities and any other that may facilitate their supervision or serve to prevent, prosecute or punish irregular conduct; may, for this purpose, conclude collaboration agreements.

Where the competent authorities do not belong to another Member State of the European Union, the supply of such information shall require that there be reciprocity and that the competent authorities are subject to secrecy. in conditions which, at least, are comparable to those established by the Spanish laws.

In the event that the competent authorities belong to another Member State of the European Union, the Banco de España will provide interested parties, on their own initiative, with any information that is essential for the exercise of their its supervisory tasks, and, when requested, all relevant information for the same purpose.

The information referred to in the preceding paragraph shall be considered essential where it may materially influence the assessment of the financial soundness of a credit institution or a financial company of another Member State of the European Union, including in particular:

(a) The identification of the structure of the group with subsidiaries or participants in the relevant Member State, and of the shareholding structure of the principal credit institutions of a group.

b) The procedures followed for the collection and verification of the information requested from the group entities.

(c) Adverse developments in the solvency situation of a group or its entities that may seriously affect its credit institutions.

d) penalties for serious or very serious infringements and exceptional measures taken, in particular the request for additional own resources in accordance with Article 11 (3) of Law 13/1985 and the imposition of limitations to the use of internal operational risk measurement methods. "

Two. A new paragraph 1a is inserted into Article 6, which is worded as follows:

" 1bis. The Bank of Spain shall consult the competent authorities concerned of another Member State of the European Union before taking the following decisions, where such decisions are important for the monitoring of such decisions. authorities:

(a) Those referred to in Article 58 of Law 26/1988, whatever the scope of the change in the shareholding to be resolved in the corresponding decision.

(b) the reports to be issued in merger, division or any other major changes in the organisation or, management of a credit institution, and which is subject to state administrative authorisation; or autonomic.

c) Proposals for penalties for very serious infringements in accordance with the provisions of Law 26/1988, or for penalties for serious infringements involving public admonition or disablement of administrators or managers.

(d) The intervention and replacement referred to in Articles 31 to 37 of Law 26/1988.

e) The request for additional own resources as provided for in Article 11.3 of Law 13/1985 and the imposition of limitations on the use of internal methods of measurement of operational risk.

However, in the cases referred to in points (c), (d) and (e), the European Union authority responsible for the consolidated supervision of the group concerned shall always be consulted.

In any event, the Banco de España may not carry out the consultation referred to in the preceding paragraph in cases of urgency, or when it understands that the consultation may compromise the effectiveness of the decisions themselves. In such cases it shall inform the authorities concerned without delay of the final decision taken. '

Final disposition second. Amendment of Law 26/1988, of July 29, of discipline and intervention of the Credit Entities.

Law 26/1988, of July 29, of discipline and intervention of the Credit Entities is amended as follows:

One. Article 4 (c) and (n) shall be worded as follows:

(c) Credit institutions or the consolidated group or the financial conglomerate to which they belong in insufficient coverage of the minimum own resources requirements, where they are below 80 per (a) the minimum set of rules according to the risks assumed, or below the same percentage of the own resources requirements, if any, by the Banco de España to a given entity, remaining in such a situation for a period of at least six months. '

" (n) Present the credit institution, or the consolidable group or financial conglomerate to which it belongs, deficiencies in its organisational structure, internal control mechanisms or administrative procedures; and accounting, including those relating to the management and control of risks, where such deficiencies endanger the solvency or viability of the institution or of the financial conglomerate or group to which it belongs. '

Two. Two new paragraphs are inserted in Article 4, which are worded as follows:

" n) Non-compliance with specific policies which, in particular, have been required by the Banco de España to a given entity in the field of provisions, treatment of assets or reduction of the inherent risk to its activities, products or systems, where such policies have not been adopted within the time limit and conditions set out for the purpose by the Banco de España and the non-compliance jeopardises the solvency or viability of the institution. '

"or) Failure to comply with the restrictions or limitations imposed by the Banco de España on the business, operations or network of a given entity."

Three. Article 5 (h) and (r) shall be worded as follows:

" (h) Credit institutions or the consolidated group or financial conglomerate to which they belong in insufficient coverage of the minimum own resources requirements laid down in regulation or required, in their case, by the Banco de España to a given entity, remaining in such a situation for a period of at least six months, provided that this does not constitute a very serious infringement in accordance with the provisions of the previous Article. '

" (r) Present the credit institution, or the consolidable group or financial conglomerate to which it belongs, deficiencies in its organisational structure, internal control mechanisms or administrative procedures; and accounting, including those relating to the management and control of the risks, after the time limit granted for the purpose of the sub-healing by the competent authorities has elapsed, provided that this does not constitute a very serious infringement in accordance with the provisions of the previous article. "

Four. Two new paragraphs are inserted in Article 5, which are worded as follows:

u) Failure to comply with the obligation to make public the information referred to in Article 15 (3) (1) of Law 13/1985, as well as the publication of such information with omissions or false data, misleading or not veraces. "

" v) Non-compliance with specific policies which, in particular, have been required by the Banco de España to a given entity in terms of provisions, treatment of assets or risk reduction inherent in its activities, products or systems, where such policies have not been adopted within the time limit set for the purpose by the Bank of Spain and the non-compliance is not a very serious infringement in accordance with the provisions of the Article above. "

Five. A new paragraph 1a is inserted into Article 30a, which is worded as follows:

" 1bis. Credit institutions and consolidated groups of credit institutions shall have, under conditions proportionate to the nature, scale and complexity of their activities, of an appropriate organisational structure, with lines of responsibility either defined, transparent and consistent, as well as effective procedures for the identification, management, control and communication of the risks to which they are or may be exposed, together with appropriate internal control mechanisms, including sound administrative and accounting procedures.

As part of these governance procedures and organizational structure, credit institutions and consolidable groups of credit institutions that provide investment services shall respect the organizational requirements (a) the internal market shall be subject to the conditions laid down in Article 7b (2) of the Law 24/1988 of 28 July 1988 on the Securities Market, with the specifications to be determined.

The adoption of such measures is without prejudice to the need to define and implement those other organisational policies and procedures which, in specific relation to the provision of investment services, are (a) to be required of such entities in application of the specific securities market rules. '

Six. Article 43 (4) is worded as follows:

" 4. The authorisation for the establishment of a credit institution shall be refused where it has the minimum capital required; an appropriate organisational structure; a good administrative and accounting organisation or internal control procedures; appropriate, in accordance with the terms set out in Article 30a.1a, to ensure the sound and prudent management of the institution; or where its managers and directors, or those of its dominant entity, where it exists, do not have the good repute commercial and professional required, or when it fails to comply with the other requirements which it regulates are established to exercise banking activity. "

Seven. A new paragraph 1a is inserted into Article 43a, which is worded as follows:

" For the proper exercise of its supervisory functions, both of those mentioned in the previous paragraph, and of any other tasks entrusted to it by the laws, the Banco de España may collect from the entities and persons subject to their supervision in accordance with the applicable rules as many information as are necessary to verify compliance with the regulations and discipline to which they are required.

In order for the Banco de España to obtain such information, or to confirm its veracity, the entities and persons mentioned are obliged to make available to the Bank how many books, records and documents it considers accurate, including software, files and databases, whatever their physical or virtual support. "

Final disposition third. Basic character.

This Law has the character of basic legislation, in accordance with the provisions of Rules 11. and 13. of Article 149.1 of the Constitution.

Final disposition fourth. Regulatory enablement.

The Government is empowered to dictate how many provisions are necessary for the development, implementation and enforcement of the provisions of this Law.

Final disposition fifth. Incorporation of European Union law.

By this Law, Directive 2006 /48/EC of the European Parliament and of the Council of 14 June 2006 on access to the business of credit institutions and their financial year is partially incorporated into Spanish law. (recast).

Final disposition sixth. Entry into force.

This Law shall enter into force on 1 January 2008.

The provisions of Article 13/1985 (2) of Law 13/1985, in the wording given in paragraph 5 of the sole article of this Law, shall enter into force on the same day as the publication of this Law in the Bulletin Official of the State ' and may be applied in respect of the applications referred to in point (c) of that paragraph which were received by the Bank of Spain at a date prior to the entry into force of that provision.

The provisions of the second transitional provision shall have effect from the day following that of the publication of this Law in the "Official Gazette of the State".

Therefore,

I command all Spaniards, individuals and authorities, to keep and keep this law.

Madrid, 16 November 2007.

JOHN CARLOS R.

The President of the Government,

JOSE LUIS RODRIGUEZ ZAPATERO