Law 5/2005, of 22 April, of supervision of financial conglomerates and amending other laws of the financial sector, responds to two basic objectives: the establishment of an additional supervisory regime for financial conglomerates and the revision of sectoral regulations (banking, securities and insurance) to achieve adequate consistency between all of them and align them with the new financial conglomerates regime.

The law incorporates, in part, Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, the insurance companies and investment entities belonging to a financial conglomerate, amending Directives 73 /239/EEC, 79 /267/EEC, 92 /49/EEC, 92 /96/EEC, 93 /6/EEC and 93 /22/EEC, and Directives 98 /78/EC and 2000 /12/EC of the European Parliament and of the Council. The Community regulation must be framed in the context of the actions of the Financial Services Action Plan, which in its quest for the achievement of a single market in financial services has set the need for the reinforcement of the prudential structures. In this line of action, the Green Paper on financial services (2005-2010), which sets out the convergence criteria for the next five years, maintains between its objectives the establishment of efficient and effective supervision through the transposition, implementation and continuous evaluation of the directives set out in the action plan.

However, the law established a partial transposition of the directive that must be completed through this royal decree, by virtue of enabling the government for the regulatory development that made the final provision. second of the law.

Chapter I of the royal decree is dedicated to the establishment of the scope of the regulation, with the delimitation of the entities subject to the additional supervision regime, its identification and identification of the relevant competent authorities. In this respect, a special reference must be made to the existence in Spain since 1995 of a supervisory regime for what our organization called "non-consolidated mixed groups"; in this sense, the royal decree adapts its regime In the light of the regulation of the Law 5/2005 of 22 April, which allowed the Government to extend all or some of the obligations laid down for financial conglomerates to non-consolidated mixed groups which do not comply with the requirement for significant sectoral diversification.

Chapter II sets out the elements of the additional supervision: capital adequacy policies, intra-group transactions, concentration and risk management, internal control mechanisms and good repute and experience of the management of mixed financial holding companies.

Chapter III provides for the appointment of the coordinator of the supervision of the conglomerate, completing its activities through the identification of the financial conglomerate and the required entity. Cooperation between the competent authorities linked to the same financial conglomerate is also regulated.

Chapter IV collects the actions of the coordinator in cases of non-compliance with the obligations established by law and by this royal decree.

Chapter V points to the regulatory enablement of the different supervisors to develop the additional supervisory methods of the groups whose dominant entity is a regulated entity or a financial company a mixed portfolio that has its registered office outside the European Union.

The final provisions provide for the revision of the regulatory range (banking, securities and insurance) regulations to achieve adequate consistency between all of them and align them with the new regime of financial conglomerates. These provisions also fulfil two purposes of this royal decree: firstly, the transposition of Directive 2005 /1/EC of the European Parliament and of the Council of 9 March 2005 amending Directives 73 /239/EEC, Council Directive 85 /611/EEC, 91 /675/EEC, 92 /49/EEC and 93 /6/EEC, and Directives 94 /19/EC, 98 /78/EC, 2000 /12/EC, 2001 /34/EC, 2002 /83/EC and 2002 /87/EC in order to establish a new organisational structure for the financial services committees, which extends certain reporting obligations in the area of credit and insurance institutions; and, in second, the establishment of common commercial and professional good repute requirements for a number of supervised entities (including currency exchange establishments and valuation companies), which deals with to correct the existing conceptual dispersion up to this point.

The regulatory changes included in the final provisions are also used in the insurance field to establish an adequacy of the valuation of the real estate of the insurance institutions.

In its virtue, on the proposal of the Minister of Economy and Finance, in agreement with the Council of State and after deliberation of the Council of Ministers at its meeting on November 11, 2005,

DISPONGO:

CHAPTER I

General provisions

Article 1. Object.

This royal decree aims to develop the provisions of Law 5/2005, of 22 April, of supervision of financial conglomerates and amending other laws of the financial sector (hereinafter the law).

Article 2. Scope.

1. Without prejudice to the provisions relating to the supervision of groups of financial institutions covered by the sectoral rules, regulated entities in financial conglomerates shall be subject to the set of obligations laid down in this Regulation. this royal decree and its development provisions.

2. The groups meeting all the requirements laid down in Articles 2 and 3 of the Law, except as provided for in Article 2.1.c thereof, shall be subject to the provisions of Article 13.2 of this Royal Decree in respect of the obligations of the information. Articles 5, 6 and 7 of the law shall apply to them.

3. In the groups referred to in the last indent of the second paragraph of Article 2.5 of the law, the coordinator and the relevant competent authorities may decide, by common agreement:

(a) That they are not subject to all the obligations laid down in Chapter II; in that case, the provisions of the preceding paragraph shall apply to them.

(b) to be subject only to the obligations laid down in Article 6.

The authorities indicated may take the decisions referred to in this paragraph if they consider that the application of all the obligations laid down in this royal decree is not necessary, or is inappropriate, or could to mislead with respect to the objectives of the supplementary supervision, taking into account:

1. º The size of the smallest financial sector, especially if it is not more than five percent, calculated according to the average referred to in article 2.5 of the law, or in terms of total balance or requirements the solvency of the financial sector.

2. Its market share, especially if it is not more than 5% in any Member State, in terms of total balance in the banking and investment services sector and in terms of gross premiums issued in the insurance industry.

4. In the case of regulated entities, as referred to in Article 4 (4) of the Act, in which one or more natural or legal persons maintain equity or share capital or have a significant influence, the competent authorities They may, by mutual agreement, require the fulfilment of all or any of the obligations laid down in this Chapter, as if the regulated entities constitute a financial conglomerate, provided that at least one of the undertakings belongs to the the insurance sector and the other in the banking and investment services sectors and both sectors significant within the meaning of article 2.5 of the law.

To take the appropriate decision, the following factors should be taken into consideration by the authorities:

(a) The possibility that such persons may assume, in fact or in law, whether by virtue of contractual agreements or any other legal link, sufficient powers to, irrespective of whether they are exercised or not, to set the strategy or the way of managing the business of regulated entities, or to designate at least one third of the members of the board of directors of those entities.

(b) Existence among regulated entities of economic interrelations, based, among other factors, on direct, indirect or reciprocal financial support, or other analogs that entail substantial financial dependence or economic.

(c) In the case of cooperative or mutual groups, the base of partners, direct or indirect, that is common to the credit unions or social welfare mutual societies concerned.

Article 3. Financial institutions and financial sector.

1. For the purposes of this royal decree and the provisions of Article 2.4 of the Act, the following entities shall be understood to be part of the financial sector of a group:

(a) The regulated entities referred to in Article 2.3 of the Act.

(b) The mixed financial holding companies provided for in Article 2.7 of the Act.

(c) Venture capital companies and the management companies of venture capital entities.

d) Variable capital investment companies.

(e) entities whose principal activity is the holding of shares or units; the principal activity of an entity shall be understood as holding shares or holdings where, on the date of the date of the consolidated accounting statements, more than half of its assets are made up of permanent financial investments in capital, regardless of the activity, social object or status of the participating entities.

(f) FVC companies whose activity involves extending the business of a financial institution, or consists primarily of the provision to entities of the group of ancillary services, such as holding of buildings or material assets, the provision of computer services, assessment, representation, mediation or similar services.

2. The banking and investment services sector shall consist of the credit institutions and investment firms of the financial conglomerate, as well as the other entities that integrate a consolidated group or sub-group of investment services. credit or a consolidated group or sub-group of investment services companies.

The insurance sector shall consist of the insurance and reinsurance entities of the financial conglomerate, as well as the other entities that integrate a consolidated group or subgroup of insurance entities.

For the above purposes, the provisions of Article 6.4 of Royal Decree 1343/1992 of 6 November 1992, implementing Law 13/1992 of 1 June 1992 on own resources and supervision on a consolidated basis of the financial institutions.

Article 4. Rules applicable to calculations required to identify financial conglomerates.

1. The calculations provided for in Article 2 of the Act shall be carried out once a year in all groups in which at least one of the entities in the group belongs to the insurance sector and at least one other to the banking and investment services sector.

2. The calculations in relation to the balance sheet shall be made on the basis of the aggregate balance sheet of the group's institutions, in accordance with their annual accounts. However, where consolidated accounts are available and they provide independent data for the sectors referred to in the previous Article, they shall be used in accordance with the allocation criteria equivalent to those set out therein. of the aggregated accounts. For the purposes of these calculations, the amount of the total balance sheet corresponding to the aggregate share held by the group shall be taken into account for the companies in which the shares are held, provided that no accounts are used consolidated or when used and those companies are not included in the figures for the sector in which they are to be integrated.

3. The relevant competent authorities may, by common agreement:

(a) Exclude an entity by carrying out the calculations provided for in Article 2 (4) and (5) of the law, in the same cases referred to in Article 6.4 of this royal decree.

b) Taking into consideration whether the thresholds provided for in the law for three consecutive years are respected, in order to avoid abrupt regime changes and to stop taking into consideration this circumstance if the structure of the group suffers significant changes.

For financial conglomerates already identified as such, the above decisions will be made on the basis of a proposal from the coordinator of that conglomerate.

4. The relevant competent authorities may, in exceptional cases and by common agreement, take the decision provided for in Article 2.6 of the law where they consider that the parameters referred to in that provision are particularly important to the effects of additional monitoring.

Article 5. Relevant competent authorities.

For the purposes of this royal decree, they will be relevant competent authorities:

(a) The competent Spanish authorities or other Member States of the European Union who are responsible for the supervision on a consolidated basis of the regulated entities in a financial conglomerate.

(b) The coordinator designated in accordance with Article 14 in the event that it is different from the authorities referred to in subparagraph (a) above.

(c) Other competent authorities concerned, where the authorities referred to in the preceding two subparagraphs decide by common agreement; for that purpose, they shall take into account in particular the market share of the entities concerned. regulated in the conglomerate in other Member States of the European Union, in particular if it is more than 5%, as well as the importance of any regulated entity established in another Member State in the conglomerate.

(d) If this is a financial conglomerate whose foreign regulated entities do not belong to another Member State of the European Union, the Banco de España if a credit institution is included in the financial conglomerate Spain; the National Securities Market Commission if the conglomerate were included in a Spanish investment firm and the General Directorate of Insurance and Pension Funds if the financial conglomerate included a Spanish insurer or reinsurer.

CHAPTER II

Additional monitoring items

Article 6. Additional capital adequacy requirements.

1. In cases where the dominant entity of the conglomerate is a Spanish regulated entity or where all relevant competent authorities are Spanish, the rules provided for in paragraphs 3 and 4 of this Article shall apply.

In cases other than those provided for in this paragraph 1, the coordinator shall decide, after consulting the other relevant competent authorities and the required entity of the financial conglomerate, on the basis of which method The capital adequacy requirements of the regulated entities in the financial conglomerate shall be calculated in the Annex.

2. The financial conglomerate's own resources shall comprise the result of the sum of:

(a) The own resources of the credit institution or the consolidated group of credit institutions, which are part of the financial conglomerate, as defined in Chapter II of Title I of the Royal Decree 1343/1992, of 6 November, and in its implementing legislation.

(b) The own resources of the investment firm or the consolidated group of investment services, which are part of the financial conglomerate, as defined in Chapter II of Title II of the Royal Decree 1343/1992, of 6 November, and in its implementing legislation.

(c) The uncommitted own equity of the insurance undertaking or consolidable group of insurance institutions, which are part of the financial conglomerate, as defined in the Regulation on the management and supervision of private insurance, approved by Royal Decree 2486/1998 of 20 November.

Of that sum will be deducted:

1. º Equity shares between entities in the financial conglomerate, except that their amount has already been eliminated by consolidation or deducted from the own resources of the consolidated entities or groups members of that. Deductions shall be made by the value in the books of the entity holding such holdings.

2. The excess, if any, of those elements belonging to the own resources or uncommitted own assets that do not have such consideration according to the rules applicable to the individual financial institutions or consolidated financial groups supervised by the Spanish authority acting as the coordinator of the financial conglomerate, on the requirements of own resources or minimum non-committed assets of the individual financial institution or group consolidable in which they are computable. In order to determine such excess, it will first apply, if there is, the lower quality of the own resources in accordance with the applicable sectoral legislation, and those requirements covered by the rules will be distributed on a pro rata basis. own resources of the same group to those of the items to be excluded.

The coordinator may establish that the amount of the financial operations or financial commitments that are carried out, or between the different entities, shall be deducted from the effective own resources of the financial conglomerate. financial assets belonging to the conglomerate that are not consolidated between them, either between any of the financial institutions of that group and some third party, which generate a doubling in the calculation of the conglomerate's own resources The European Commission has been able to make the most of its own resources to cover losses or to deal with the risks assumed by the financial conglomerate as a whole.

3. The actual own resources of the financial conglomerate, after the deductions provided for in the preceding paragraph, may not be lower at any time to the sum of the own resources requirements and the solvency margin. established, in accordance with their specific rules, for each class of consolidated entities or groups integrated in the financial conglomerate.

When the representative assets of units and other internal transactions between non-consolidated entities belonging to the financial conglomerate involve the requirements of own resources for any of them or, in their For its consolidated group, such requirements shall not be taken into account in the calculation of the minimum own resources requirements of the financial conglomerate. Assets deducted from own resources shall not be considered in the calculation of the minimum own resources requirements of the financial conglomerate.

4. The coordinator may decide not to include a specific entity in the calculation of the additional capital adequacy requirements in the following cases:

(a) Where the entity is located in a third country where there are legal impediments to the transfer of the necessary information.

(b) When the entity is individually considered to be of little significant interest in consideration of the objectives of the supplementary supervision. As several companies of the group are in these circumstances, they cannot be excluded more than if they are of little significant interest in their entirety in relation to the intended purpose.

(c) Where the inclusion of the entity is inappropriate or misleading in relation to the objectives of the supplementary supervision. In this case, and except for emergency situations, the coordinator shall consult the other relevant competent authorities before taking the decision.

Where a regulated entity is excluded on the basis of paragraphs (b) and (c), the competent authority responsible for its individual supervision may request the reporting entity from the financial conglomerate which can facilitate the supervision of the regulated entity.

5. The solvency requirements referred to in this Article shall be calculated in accordance with the relevant sectoral rules.

Article 7. Technical principles of capital adequacy.

1. Both in the cases referred to in paragraph 2 and in those provided for in paragraph 5 of the previous Article, and irrespective of the method used in the latter case, the technical principles set out in this Article shall apply.

2. Whichever method is used, where the entity is a dependent entity and has a solvency deficit or, in the case of a non-regulated entity in the financial sector, a theoretical solvency deficit, the deficit shall be taken into account total solvency of the subsidiary. If in this case, in the case of the coordinator, the responsibility of the dominant undertaking holding a part of the capital is strictly and clearly limited to that share of the capital, the coordinator may allow the solvency deficit of the capital is taken into account on a proportional basis.

In cases where there are no capital links between the entities in a financial conglomerate, the coordinator, after consulting the other relevant competent authorities, will determine which proportional share will be consider, taking into account the responsibility derived from existing links.

3. The following principles should also be taken into account:

(a) The multiple calculation of eligible items to calculate the financial conglomerate's own resources, as well as any inappropriate creation of own resources within the group, should be eliminated; elimination of multiple computation and the creation of own resources within the group, the competent authorities shall apply by analogy the relevant principles laid down in the sectoral rules.

(b) The solvency requirements of each of the financial sectors represented in a financial conglomerate shall be covered by elements of own resources in accordance with the relevant sectoral rules; where there is a deficit of own resources referred to in the financial conglomerate, only the elements of own resources that are eligible for each of the sectoral rules shall be taken into account to verify compliance with the requirements additional solvency.

c) Where the sectoral rules lay down eligibility limits for certain instruments of own resources which could be considered cross-sectoral capital, these limits shall be applied in the same way when calculating the own resources referred to the financial conglomerate.

(d) When calculating own resources at the level of the financial conglomerate, the competent authorities shall also take into account the effectiveness of the transferability and availability of own resources among the various persons. legal status of the group, considering the objectives of the capital adequacy rules.

e) In the case of a non-regulated entity in the financial sector, where a theoretical solvency requirement is calculated in accordance with the requirements set out in the Annex, the capital requirement shall be understood as a theoretical solvency requirement. that the institution should satisfy, in accordance with the relevant, sectoral or general rules, if it were a regulated entity in that financial sector. The theoretical solvency requirement of a mixed financial holding company shall be calculated in accordance with the sectoral rules for the most important financial sector in the financial conglomerate.

Article 8. Intra-group operations.

1. The required institutions of the financial conglomerates shall report to the coordinator, at the intervals determined by the coordinator, which shall be at least annual, on any significant intra-group transactions of the regulated entities of the financial conglomerates. financial conglomerate.

2. For the purposes set out in the preceding paragraph, an intra-group transaction shall mean any legal transaction or business, irrespective of its nature, which directly or indirectly relates to regulated entities in a conglomerate. financial with other undertakings of the same group or with any natural or legal person closely linked to the undertakings of that group for the performance of an obligation, whether or not contractual, whether or not it has a payment.

3. Without prejudice to Article 10, any intra-group transaction of an amount exceeding five per cent of the financial conglomerate's own resources is considered to be significant.

Article 9. Risk concentration.

1. The obliging entities of the financial conglomerates shall report to the coordinator, at the intervals determined by the coordinator, which shall be at least annual, on any significant risk concentration in the financial conglomerate.

2. For the purposes set out in the preceding paragraph, risk concentration shall mean any exposure that may give rise to losses incurred by entities in a financial conglomerate that is of sufficient importance to commit the solvency or the overall financial position of the regulated entities in the financial conglomerate. Such exposures may be derived from counterparty or credit risks, investment risks, insurance risks, market risks or other risks or from a combination or interaction of such risks.

3. Without prejudice to the provisions of the following Article, significant risk concentration shall be considered to be those that exceed 10% of the financial conglomerate's own resources.

Article 10. Provisions common to intra-group transactions and risk concentrations.

1. The coordinator, after consulting the other relevant competent authorities, shall identify the types of operations and risks on which regulated entities in financial conglomerates shall report, in accordance with the provisions of the two previous articles, as well as the criteria for assessing such operations and risks and other technical extremes to be taken into account for the calculations.

To do this, the authorities will take into account the particular characteristics of each financial conglomerate and its risk management structure.

2. The coordinator, after consulting the other relevant competent authorities and the conglomerate itself, may define for each specific case thresholds of significance lower than those set out in the previous two articles.

3. When reviewing intra-group transactions and risk concentrations, the coordinator shall examine in particular the possible risk of contagion within the financial conglomerate, the risk of conflict of interest, the risk of circumvention of the rules sector and the level or volume of risks.

4. The Minister for Economic Affairs and Finance is enabled to establish in general, prior to the report of the Bank of Spain, the National Securities Market Commission and the General Directorate of Insurance and Pension Funds, quantitative limits and qualitative requirements in relation to intra-group transactions and the concentrations of significant risks referred to in this Article.

Article 11. Risk management and internal control.

1. Regulated entities in financial conglomerates shall have at the level of the financial conglomerate with appropriate risk management procedures and internal control mechanisms as well as with a good administrative organisation and accounting.

2. Risk management procedures shall include:

(a) Healthy governance and management that have a periodic approval and review by all the management bodies of the entities included in the conglomerate.

b) Appropriate capital adequacy policies to provide for the impact of their business strategy on the risk profile and additional capital requirements of the financial conglomerate.

(c) Appropriate procedures to ensure that your risk control systems are integrated into your organization and that the necessary measures are taken to ensure that the systems applied in all entities included in the the financial conglomerate is consistent and risks can be measured, followed and controlled at the level of the financial conglomerate.

3. Internal control mechanisms shall include:

(a) Appropriate mechanisms in relation to the adequacy of additional capital to identify and calculate all significant, internal and external risks to which the institution is exposed, and to establish an appropriate relationship between own resources and risks.

b) Solid accounting and reporting procedures, to identify, measure, monitor and control intra-group operations and risk concentration.

4. Taking into account the particular characteristics of each financial conglomerate, the coordinator may, heard the other relevant competent authorities, determine the minimum scope and content of the risk management procedures and internal control mechanisms to be provided by the financial conglomerate referred to in paragraphs 2 and 3.

5. All undertakings included in a financial conglomerate shall have adequate internal control mechanisms to collect the relevant data and information for the purposes of the supplementary supervision.

Article 12. Requirements of the managers of mixed financial holding companies.

1. The members of the Management Board of the mixed financial holding companies, including natural persons representing legal persons who are members of the Board, shall be persons of recognised commercial repute and professional and must possess at least the most appropriate knowledge and experience to perform their duties. Such good repute, knowledge and experience must also be included in the general or similar directors of the company.

2. Commercial and professional honorability in those who have been observing a personal trajectory of respect to the commercial laws or others that regulate the economic activity and the life of the business, as well as to the good practices commercial, financial and banking. In any event, it will be understood that they lack such good repute who, in Spain or abroad, have a criminal record for intentional crimes, are disabled for public office or administrative or management of financial institutions. or are disabled in accordance with Law 22/2003 of 9 July, Insolvency, until the period of disablement fixed in the judgment of qualification of the contest has been completed and those who have been broken and are not rehabilitated in proceedings conversions prior to the entry into force of that law.

3. They have adequate knowledge and experience to perform their duties in mixed financial holding companies who have performed, for a period of not less than three years, senior management, management, control or advice on financial institutions or functions of similar liability in other public or private entities with a dimension at least similar to that of the regulated entities in the financial conglomerate.

4. The obligation of the financial conglomerate must be addressed to the coordinator to inform him of the status of the administrator or director of the persons referred to in this Article and to request his registration in a special register whose registration shall be the coordinator. Such communication shall take place within 15 days of the acceptance of the charge, including personal and professional data, which shall, in general, establish the coordinator responsible for the registration, as well as the acceptance document of the the position and statement of the persons concerned that they meet the requirements of good repute and, where appropriate, experience referred to in this Article, and that there are no incourses in any limitation or incompatibility established in any rule which application.

Article 13. Obligation to provide information.

1. The entities required of financial conglomerates shall send to the coordinator the information, whether periodic or not, which the coordinator requires to verify the fulfilment of their obligations. They shall also comply with the requirements of the coordinator and, where appropriate, provide for the inspection activities, without prejudice to the competent authorities of the supervision of the integrated entities or groups in the conglomerate. may be directly addressed to them in the exercise of their individual supervisory powers or on a consolidated basis of the entities included in the conglomerate.

2. In the case of the groups provided for in Article 2.2 of this royal decree, the required entity shall forward to all relevant Spanish competent authorities the information which the authority responsible for the supervision of the required entity requires them in relation to the calculations provided for in Article 2 of the law, for the purposes of checking the non-subjection of the group to the obligations relating to supplementary supervision, and in relation to the calculation of the additional capital may be required if the condition of a financial conglomerate is acquired.

The required entity referred to in the preceding paragraph shall be the entity corresponding to the application of criteria analogous to those provided for in Article 5.5 of the Act.

CHAPTER III

Exercise of additional monitoring

Article 14. Coordinator designation rules.

1. Where the dominant entity of a financial conglomerate is a Spanish regulated entity, the function of the coordinator shall be exercised by the competent authority entrusted with the supervision and supervision functions of the consolidated group in it is integrated or, in its absence, the entity itself considered to be individually.

2. In cases other than that provided for in the preceding paragraph, the function of coordinator shall be exercised by the competent authority responsible for the supervision of the Spanish regulated entity with the highest total balance in the financial sector. important.

3. The relevant competent authorities may agree not to apply the criterion referred to in paragraph 2 if their application is inappropriate, taking into account the structure of the conglomerate and the relative importance of its activities in the different countries, and designate a different competent authority as coordinator. In such cases, before taking their decision, the competent authorities shall give the conglomerate, through the entity obliged, the opportunity to decide on the decision.

Article 15. Identification of the financial conglomerate and the required entity.

1. The Bank of Spain, the National Securities Market Commission and the Directorate-General for Insurance and Pension Funds shall cooperate closely with each other and with the other competent authorities, in order to identify the financial conglomerates in which, where applicable, Spanish entities are included. For this purpose, they may be directed to regulated entities under their jurisdiction to obtain, if not in their possession, the information necessary to carry out such identification work.

2. Identified a financial conglomerate, the coordinator shall inform the required entity of the financial conglomerate referred to in Article 5.5 of the law, of such circumstance, of its status as coordinator, as well as of the scope of the obligations of the conglomerate as provided for in the first paragraph of Article 2.1 of this royal decree.

Identical procedure shall be followed, for the purposes of Article 13, in respect of the groups referred to in Article 2.2

3. The coordinator shall also inform the competent authorities that have authorised the regulated entities in the financial conglomerate, the designation of the required entity and their status as coordinator, to the competent authorities of the financial conglomerate. competent authorities of the Member State in which the mixed financial holding company has its registered office, if any, as well as the European Commission.

4. The Minister for Economic Affairs and Finance may, on its own or through the competent authorities, establish a register of financial conglomerates which consists of the composition and structure of each conglomerate.

Article 16. Cooperation between competent authorities.

The collection and exchange of information between competent authorities shall be carried out in accordance with the terms set out in Article 6.3 of the Act and shall at least achieve the following:

(a) Identification of the structure of the group, of all the main entities belonging to the financial conglomerate, as well as of the competent authorities of the regulated entities in the group.

b) Information on the strategic policies of the financial conglomerate.

(c) Financial position of the financial conglomerate, in particular with regard to capital adequacy, intra-group transactions, risk concentration and profitability.

d) The principal shareholders and the management of the financial conglomerate.

e) Organization, risk management, and internal control systems at the level of the financial conglomerate.

f) Procedures for collecting information from entities in a financial conglomerate and verifying this information.

g) Information on the adverse developments of regulated entities or other entities in the financial conglomerate that may seriously affect regulated entities.

(h) The penalties imposed by the Commission for very serious or serious infringements and the exceptional measures taken by the competent authorities.

CHAPTER IV

Execution measures

Article 17. Actions in case of non-compliance.

1. If the coordinator understood that the financial conglomerate does not fulfill any of the obligations to which it is subject under the provisions of the law and in this royal decree and its provisions of development, it will put it to the attention of the competent authorities, to coordinate their actions in the implementation of the powers which, on regulated entities and mixed financial holding companies, grants them the order.

2. If the non-compliance relates to the additional solvency requirements, intra-group transactions or risk concentration, the coordinator, in agreement with the other relevant competent authorities, shall require the entity to be required to draw up an appropriate return to compliance plan. This requirement shall not be mandatory where the non-compliance detected in the financial conglomerate is a direct consequence of the deficit of an individual entity or a consolidated group consisting of that individual entity, unless, in the case of the coordinator, the (a) the solvency of the other consolidated entities or groups of financial institutions that are integrated in the financial conglomerate is seriously jeopardised.

CHAPTER V

Third-Party Groups

Article 18. Regulatory enablement.

Under the provisions of the second paragraph of Article 8.2 of the Law, the Minister of Economy and Finance, the Bank of Spain and the National Securities and Exchange Commission are enabled in the field of their respective powers, in order to establish other methods for the supplementary supervision of groups whose dominant entity is a regulated entity or a mixed financial holding company that has its head office outside the European Union. Among those methods, the authorities identified shall have the power to require the establishment of a mixed financial holding company having its registered office in the European Union.

The methods must meet the objectives of the supplementary supervision and be communicated to the other competent authorities and the European Commission.

First transient disposition. Transitional arrangements for non-consolidated mixed groups.

As long as the identification of the financial conglomerate or group referred to in Article 2.2 is not carried out and, where appropriate, of its required entity in accordance with the provisions of this royal decree, the groups which are at its entry in force the consideration of non-consolidable mixed groups shall maintain all the reporting obligations to which they were subject under Title V of Royal Decree 1343/1992 of 6 November.

Second transient disposition. Enrollment in special registers.

Within six months of the entry into force of this royal decree, members of the board of directors, directors or assimilated entities of the dominant entity of any Spanish regulated entity, which is not an entity of credit, investment firm or insurance or reinsurance undertaking, must apply for registration in the relevant special register of senior officials, in accordance with the rules applicable to them.

Transitional provision third. Transitional arrangements for the application files for the valuation of buildings by insurance companies for the services of the Directorate-General for Insurance and Pension Plans.

Applications for the valuation of real estate by insurance companies for the technical services of the General Directorate of Insurance and Pension Funds that have been submitted prior to the entry into force of this real Decree shall be processed and resolved in accordance with the rules in force at the time of application.

Single repeal provision. Regulatory derogations.

Title IV and Title V of Royal Decree 1343/1992, of 6 November, of the development of Law 13/1992, of 1 June, of own resources and supervision on a consolidated basis of financial institutions, are hereby repealed.

The provisions relating to the application for the valuation of buildings by insurance companies for the technical services of the General Directorate of Insurance and Pension Funds contained in the Order are hereby repealed. ECO/805/2003 of 27 March 2003 on rules for the valuation of immovable property and certain rights for certain financial purposes.

Final disposition first. Amendment of Royal Decree 1343/1992 of 6 November, implementing Law 13/1992 of 1 June 1992 on own resources and supervision on a consolidated basis of financial institutions.

Royal Decree 1343/1992 of 6 November 1992, for which it is developed under Law 13/1992, of 1 June, of own resources and supervision on a consolidated basis of financial institutions, is amended as follows:

One. Article 1 is worded as follows:

" Article 1. Concept.

The financial institution groups referred to in Chapters I and II of Law 13/1992, of 1 June, of own resources and supervision on a consolidated basis of financial institutions, are those sets of entities of this nature in which any of the following conditions are met:

a) That a financial institution controls one or more financial entities.

b) That a natural person, a group of persons acting systematically in concert, or a non-financial institution controls several financial institutions. "

Two. Article 2 is worded as follows:

" Item 2. Control of an entity.

1. In order to determine whether there is a control relationship, the criteria set out in Article 4 of the Law 24/1988 of 28 July of the Stock Market will be met.

2. For the purposes of prudential supervision on a consolidated basis provided for in this royal decree, account shall be taken of the financial institutions in which a holding is held. Participation shall be understood as any right to the capital of another company which creates a lasting link with it and is intended to contribute to the activity of the company, as well as, in any event, the holding, in a direct or indirect manner, of at least 20 percent of its capital or voting rights. "

Three. The first subparagraph of Article 3 (1), 'Financial institutions', is worded as follows:

" 1. For the purposes of this royal decree, the following financial institutions shall be considered:

a) Credit institutions.

b) Investment services companies.

c) Insurance and reinsurance entities.

d) Investment companies.

e) The management companies of collective investment institutions, as well as pension fund management companies, whose exclusive social object is the administration and management of the aforementioned funds.

(f) Venture capital and venture capital management companies.

(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 the financial conglomerate.

(h) Entities, whatever their name or status, which, in accordance with the rules applicable to them, exercise the typical activities of the former. "

Four. A paragraph 3 is added to Article 4, "Entities belonging to groups of financial institutions on the basis of nationality criteria", with the following wording:

" 3. In the event that the dominant entity of a credit institution is a financial institution with an address outside the European Union, it shall be subject to the provisions of Article 16.2a. '

Five. Article 6 (1) and (3), "Consolidation of groups of financial institutions", are worded as follows:

" 1. For the fulfilment of the obligations laid down in this royal decree and without prejudice to paragraph 3, the financial institutions component of the same group shall consolidate their financial statements in the terms that they are set out in the specific rules for each type of group of financial institutions. For the same purposes, financial 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 holdings in the sense indicated in paragraph 1. 1 of Article 185 of the recast of the Law of Companies, approved by Royal Decree 1564/1989 of 22 December 1989, or, directly or indirectly, at least 20% of the capital or voting rights in another financial institution.

Financial institution groups shall have adequate risk management processes and internal control mechanisms, including sound administrative and accounting procedures, and all entities or companies that are They shall have appropriate mechanisms in place to provide information that is necessary for compliance with the standards required of the group. '

" 3. By way of derogation, the financial statements of insurance institutions and their groups, on the one hand, with those of credit institutions and investment firms and their respective groups, on the other, shall not be consolidated without prejudice to the accounting transactions that are required to be performed when the assumptions provided for in Law 5/2005 of 22 April of the supervision of financial conglomerates are met and other financial sector laws are amended.

The mixed financial holding companies referred to in Article 3.1.g) shall be integrated into the relevant consolidated group or sub-group of financial institutions where they are controlled by a credit institution, a an investment firm or an insurance or reinsurance undertaking. '

Six. Article 7 (1), "Types of consolidable groups of financial institutions", is worded as follows:

" 1. For the purposes of this royal decree, the following are consolidated groups of financial institutions:

(a) The consolidable groups of credit institutions, regulated in Title I.

(b) The consolidable groups of investment services companies, regulated under Title II. "

Seven. Article 16 (1) (c), "Definition", is worded as follows, and a new paragraph 2a is added, with the following wording:

" (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 In the case of a credit institution, it is not possible to apply a credit institution to a credit institution, provided that the credit institutions are the most relative of the financial institutions, of the financial institutions, of the compliance with the criteria set out by the Minister for Economic Affairs and Finance. "

" 2 bis. Where the Spanish credit institutions are holding a foreign financial institution domiciled outside the European Union, the Banco de España shall verify that they are subject to supervision on a consolidated basis by a Spanish credit institution. competent authority of a third country which is equivalent to that provided for in this royal decree.

In the event that the existence of an equivalent supervisory regime is not assessed, the supervisory regime on a consolidated basis as provided for in the preceding paragraph shall apply to the credit institutions referred to in the preceding paragraph. this royal decree.

By way of derogation from the preceding paragraph, the Banco de España may establish other methods for the supervision on a consolidated basis of the groups referred to in this paragraph. Such methods shall include the power of the Bank of Spain to require the establishment of a dominant financial institution having its registered office in the European Union.

The methods must meet the objectives of the consolidated supervision defined in this royal decree and be communicated to the other competent authorities involved and to the European Commission. "

Eight. A paragraph 3 is added to Article 17, "prudential supervision", with the following wording:

" 3. The Banco de España shall carry out a general supervision of the transactions between the credit institutions and the other entities included in its consolidated group, as well as between all those listed and the dominant non-financial institution and its subsidiaries. The Banco de España is enabled to define the type of operations or categories of operations to be subject to such supervision, as well as the scope of the information, whether periodic or not, to be forwarded on this matter. "

Nine. Paragraphs (d) (a) and (f) bis are added and new wording is given to paragraphs (b), (c) and (f) and to the last subparagraph of paragraph 1, as well as to the second subparagraph of Article 20 (2), "Composition of own resources":

" (b) Effective and express reserves, including the participation fund and the reserve fund of the savings banks and their confederation.

(c) reserves of regularisation, updating or revaluation of assets, as well as capital gains that are accounted for within the net worth by application to the assets of the fair value criterion, provided that they are subject to to the accounting rules in force for credit institutions; the Banco de España may agree, taking into account the volatility of the different types of assets, a reduction of up to two thirds in its gross amount. '

" (d) bis The accounting balance of the generic coverage corresponding to the risk of clients ' insolvency, that is, linked to losses inherent or not specifically assigned by impairment of credit risk, provided that is subject to the accounting rules in force for credit institutions, and in the part that, in view of its temporary profile, can be agreed by the Banco de España in general. In any event, this element may not exceed 1,25% of the risks which have been used as a basis for the calculation of the coverage, weighted in the manner determined in accordance with Article 26. '

" (f) The share of the share capital corresponding to the shares without a vote and to the salvageable shares whose duration is not less than that provided for in Article 22.3 for subordinated financing, regulated in the sections 5. and 6. of Chapter IV of the recast of the Law of Companies, approved by the Royal Decree of Law 1564/1989, of December 22.

(f) bis The preferred shares issued as provided for in the second provision of Law 13/1985 of 25 May. '

"For inclusion among own resources, the items referred to in paragraphs (a), (f), (f) (a), (g) and (h) shall be computed on the part that is actually disbursed."

" Without prejudice to the power of the Bank of Spain referred to in Article 22.4, the shares representing minority interests shall be distributed between paragraphs (b), (g) and (h) of paragraph 1 for the purposes of the limits set out in Article 23, in accordance with the following criteria:

(a) Among the items referred to in paragraph 1 (b) shall include shares representing ordinary shares, materialised in preference shares issued by foreign subsidiaries, provided that they are available for risk and loss coverage under the same conditions, addressed to their own mercantile nature, that the ordinary shares, their duration is indeterminate and do not give cumulative rights to the collection of dividends, and (a) materialised by non-voting shares which do not grant cumulative rights to the recovery of dividends.

(b) Among the items referred to in paragraph 1 (h) shall include the representative shares of silent shares issued by Spanish subsidiaries that grant cumulative rights to the collection of dividends, of the shares Preference shares issued by foreign subsidiaries which are available to absorb losses of the institution without the need for dissolution, and which either have an indeterminate duration or, if determined, are not lower than that provided for in Article 1 (1) of the in Article 22.3 for subordinated financing and not granting rights cumulative to the collection of dividends, and the salvageable shares that meet these last two conditions.

(c) Among the items referred to in paragraph 1 (g) shall include the representative shares of the redeemable shares, and the preferred shares issued with a fixed duration by foreign subsidiaries, when they grant cumulative rights to the collection of dividends. In any event, their duration may not be lower than that provided for in Article 22.3 for subordinate financing. '

Ten. Article 21 (1) (e), "Deductions from own resources", is worded as follows, and a paragraph (e) is added with the following wording:

" (e) Shares in financial institutions that are not integrated into the consolidated group where, in general, the participation of the credit institution, or the consolidable group of credit institutions, is greater than 10% percent of the capital of the investee.

(e) bis With a particular character, in the case of holdings in insurance, reinsurance or other entities whose principal activity consists in taking shares in insurance institutions, the shares in excess of 20% of the capital of the investee. '

Once. The first subparagraph of Article 22 (2) and Article 22 (4), "Conditions for the computerability of own resources", shall be worded as follows:

" 2. In order to qualify as own resources, the reserves, funds and provisions referred to in Article 20 (1) (c), (d), (d) and (e) shall, to the satisfaction of the Bank of Spain, comply with the following requirements: "

" 4. The Bank of Spain shall be responsible for the rating and inclusion in the own resources of a credit institution or a consolidated group of credit institutions of all types of preferred stock or preferred shares, issued in accordance with the rules which are applicable, and the elements referred to in Article 20 (1) (f), (f) (a), (g) and (h), issued by the entities themselves or by financial instruments and other subsidiaries. The Bank of Spain shall take care, in particular, that the law of the country in which the issue is issued, or the own interposition of the FVCs or subsidiaries, does not weaken the effectiveness of the requirements and limitations established for such companies. instruments, nor their value as the group's own resources. "

Twelve. Article 23 (1) (a) and (c) and Article 23 (2) (a), "Limits on the calculation of own resources", shall be worded as follows:

" (a) The basic own resources of a credit institution shall be made up of the sum of the items referred to in Article 20 (1) (a), (b), (d) and (f) (a), as well as by non-voting shares which do not give cumulative rights to the collection of dividends, minus the amount of the concept referred to in Article 21.1.a) and the items included in the concepts referred to in Article 21.1.b), (c) and (d) relating to those items. "

" (c) The second-rate own resources of a credit institution shall be made up of the elements contained in Article 20 (1) (c), (d) (a), (g) and (h), by the non-voting shares which do not meet the conditions to be included among the basic own resources and by the salvageable shares whose duration is not less than that provided for in Article 22.3 for subordinate financing. '

" (a) The excess of the items included in Article 20.1 (g) and of the redeemable shares that are eligible for second-rate own resources that grant cumulative rights to the collection of dividends, over 50 percent of the the core own resources of the consolidable entity or group. '

Thirteen. Article 36 (1) (c), "Definition", is worded as follows:

" (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 In the case of the case-law of the Commission, the Commission decided to take the measures necessary to ensure that the measures taken by the Commission were to be taken into account in the light of the Commission's decision. financial institutions, in accordance with the criteria laid down by the Minister for Economy and Finance. "

Fourteen. The references contained in Royal Decree 1343/1992 of 6 November 1992 to the consolidated groups of companies and securities agencies shall be construed as being made to the consolidable groups of investment firms.

Final disposition second. Amendment of the Implementing Regulation of Law 13/1989, of 26 May, of credit unions, approved by Royal Decree 84/1993, of 22 January.

Article 2 (2), "Requirements for obtaining and maintaining authorization", of the Regulation of 26 May 1989, of the Development of Law 13/1989, of credit unions, approved by Royal Decree 84/1993 of 22 January 1993, it is worded as follows:

" 2. Commercial and professional honorability in those who have been observing a personal trajectory of respect to the commercial laws or others that regulate the economic activity and the life of the business, as well as to the good practices commercial, financial and banking. In any event, it will be understood that they lack such good repute who, in Spain or abroad, have a criminal record for intentional crimes, are disabled for public office or administrative or management of financial institutions. or are disabled in accordance with Law 22/2003, of July 9, Insolvency, until the period of disqualification fixed in the judgment of qualification of the contest has been completed, the broken and the non-qualified in procedures consents prior to the entry into force of that law. "

Final disposition third. Amendment of Royal Decree 1245/1995 of 14 July on the establishment of banks, cross-border activity and other matters relating to the legal status of credit institutions.

Royal Decree 1245/1995 of 14 July 1995 on the creation of banks, cross-border activity and other matters relating to the legal status of credit institutions is amended as follows:

One. Article 2 (1) (f) and Article 2 (2), "Requirements for the exercise of banking activity", are worded as follows, and a new paragraph 6 is inserted, with the following wording:

" f) Contar with a board of directors formed by no less than five members. All members of the board of directors of the institution, as well as those of the management board of its dominant entity where it exists, shall be persons of recognised commercial and professional repute and shall have at least the majority in (a) every council, knowledge and experience appropriate to perform its duties. Such good repute and experience must also be provided in the general or similar directors of the institution and its parent, where it exists, as well as in the natural persons representing legal persons who are members of the body. "

" 2. Commercial and professional honorability in those who have been observing a personal trajectory of respect to the commercial laws or others that regulate the economic activity and the life of the business, as well as to the good practices commercial, financial and banking. In any event, it will be understood that they lack such good repute who, in Spain or abroad, have a criminal record for intentional crimes, are disabled for public office or administrative or management of financial institutions. or are disabled in accordance with Law 22/2003 of 9 July, Insolvency, until the period of disablement fixed in the judgment of qualification of the contest has been completed and those who have been broken and are not rehabilitated in proceedings consents prior to the entry into force of that law. "

" 6. In addition to the management of the register of senior banking positions, the Banco de España will be responsible for the creation and management of a register of directors and directors-general of the dominant entities, other than credit institutions, service companies investment or insurance companies or reinsurers of Spanish banks, where the directors, directors and assimilated persons must be registered. For the registration of such registration, such persons shall communicate their appointment within 15 days of their taking of possession, including personal and professional data which the Bank of Spain and the Bank of Spain expressly declare, in the document certifying your acceptance of the charge, that they meet the requirements of good repute and, where appropriate, professionalism as referred to in this article, and that there are no incourses in any limitation or incompatibility set out in the rules applicable to them. "

Two. Article 7 (2) and the last subparagraph of Article 7 (3), "Authorisation of banks subject to the control of foreign persons", are hereby worded as follows:

" 2. Where the control of the Spanish bank is to be carried out by a credit institution, an investment firm or an insurance or reinsurance undertaking authorised in another Member State of the European Union, by the dominant entity of one of those entities, or by the same natural or legal persons controlling a credit institution, an investment firm or an insurance or reinsurance undertaking authorised in another Member State, the Banco de España, before to issue the report referred to in Article 1 (1), shall consult the authorities; (a) responsible for the supervision of the credit institution, investment firm or insurance undertaking or foreign reinsurer. ' ' The authorisations granted to the banks referred to in this paragraph shall be communicated by the Bank of Spain to the Commission of the European Union, as well as to the competent authorities of the other Member States, specifying the structure of the group to which the controlled entity belongs. "

Three. Article 19 (2), "Information on the capital structure of credit institutions", is worded as follows:

" 3. The Banco de España, as soon as it becomes aware of this, will communicate to the Ministry of Economy and Finance the transmissions of shares or contributions of a credit institution that imply a change in the control of the institution, in the sense of Article 4 of Law 24/1988 of 28 July. The Bank of Spain shall also inform the Commission of the European Union, as well as the competent authorities of the other Member States, of the changes in the capital structure set out in this paragraph. '

Final disposition fourth. Amendment of Royal Decree 692/1996 of 26 April 1996 on the legal status of credit institutions.

Royal Decree 692/1996 of 26 April 1996 on the legal status of credit institutions is amended as follows:

One. Article 4 (2), "Authorisation and registration of credit institutions subject to the control of foreign persons", is hereby worded as follows:

" 2. Where the control of the Spanish credit establishment is to be carried out by a credit institution, an investment firm or an insurance or reinsurance undertaking authorised in another Member State of the Union European, by the dominant entity of one of those entities or by the same natural or legal persons controlling a credit institution, an investment firm or an insurance or reinsurance undertaking authorised in another State Member, the Bank of Spain, before issuing the report referred to in Article 3.1, shall consult the authorities responsible for the supervision of the credit institution, investment firm or insurance undertaking or foreign reinsurer.

The authorisations granted to the credit institutions referred to in this paragraph shall be communicated by the Bank of Spain to the Commission of the European Union, as well as to the competent authorities of the other Member States, specifying the structure of the group to which the controlled entity belongs. '

Two. Article 5 (1) (e), "Requirements for the exercise of the activity", is worded as follows, and a second subparagraph is added to paragraph 3, with the following wording:

" e) Contar with an administrative board consisting of no less than three members. All members of the board of directors of the institution, as well as those of the governing board of its dominant entity where it exists, shall be persons of recognised commercial and professional repute and shall have at least three of the following: members of each of the appropriate councils, knowledge and experience to perform their duties. Such good repute and experience must also be provided in the general or similar directors of the institution and its parent, where it exists, as well as in the natural persons representing legal persons who are members of the body.

Compete commercial and professional honorability in those who have been observing a personal trajectory of respect to the commercial laws or others that regulate the economic activity and the life of the business, as well as to the good commercial, financial and banking practices. In any event, it will be understood that they lack such good repute who, in Spain or abroad, have a criminal record for criminal offences, who are unable to carry out public or administrative positions or the management of financial institutions or are disabled in accordance with Law 22/2003 of 9 July, Insolvency, until the period of disqualification fixed in the judgment of qualification of the contest has been completed and those who are not rehabilitated in proceedings conversions prior to the entry into force of that law.

possess adequate knowledge and experience to perform their duties in credit financial institutions who have performed, for a period of not less than two years, senior management, management, control or advice of financial institutions or functions of similar responsibility in other entities, public or private, with a dimension at least analogous to the entity intended to be created. '

" It is also for the Banco de España to create and manage a register of directors and directors-general of the dominant entities, other than credit institutions, investment firms or entities insurance companies or reinsurers of Spanish credit institutions, where the directors, directors and assimilated persons must be registered. The same procedure as provided for in the preceding paragraph shall be followed for the entry in that register. '

Final disposition fifth. Amendment of Royal Decree 775/1997 of 30 May 1997 on the legal arrangements for the type-approval of services and companies of assessment.

Article 3 (2), "Requirements for approval", of Royal Decree 775/1997 of 30 May 1997 on the legal system for the approval of services and companies of assessment, is hereby worded as follows:

" 2. For the purposes of their approval, commercial and professional honorability in those who have been observing a personal trajectory of respect to the laws of trade or other that regulate the economic activity and the life of the business, as well as to good business, financial and banking practices.

In any case, it will be understood that they lack such good repute who, in Spain or abroad, have a criminal record for intentional crimes, are disabled to exercise public or administrative posts or financial institutions or are disabled in accordance with Law 22/2003, of 9 July, Insolvency, until the period of disablement fixed in the judgment of qualification of the contest has been completed and the broken and unrehabilitated in (a) procedures for prior to the entry into force of that law. "

Final disposition sixth. Amendment of the Regulation on the management and supervision of private insurance, approved by Royal Decree 2486/1998 of 20 November 1998.

The Regulation on the Management and Supervision of Private Insurance, approved by Royal Decree 2486/1998 of 20 November, is amended as follows:

One. Paragraph (b) bis is added and paragraph (e) is amended, both in Article 4 (1), "Application and administrative authorisation", with the following wording:

" (b) a relationship of the partners who have the status of an insurance undertaking, credit institution or investment firm, as well as, where applicable, the shares, regardless of their value, of which they are holder any partner in an insurance undertaking, credit institution or investment firm. '

" (e) Relation of those who, under any title, carry the effective direction of the entity, or of the dominant entity, to which the questionnaire that the Ministry of Economy and the Ministry of Economy is established shall be accompanied. Hacienda referred to the conditions of professional qualification or experience referred to in article 15 of the law. "

Two. Article 50 (10) (d), "Goods and rights for the investment of technical provisions" shall be worded as follows:

" (d) Haber been assessed by an approved valuation entity for the valuation of assets on the mortgage market, in accordance with the specific rules for the valuation of buildings eligible for the provision of the provisions Technical provisions of the insurance institutions approved by the Ministry of Economy and Finance. '

Three. A final subparagraph is added to Article 52 (1) (d), "Valuation of investments in technical provisions", with the following wording:

"The Directorate-General for Insurance and Pension Funds may check and review, ex officio, through its technical services, the values attributed to real estate and real estate rights."

Four. Paragraphs (e) and (f) are added to paragraph 2, as well as a new paragraph 2a, in Article 59, "Uncommitted own heritage", with the following wording:

" (e) Shares equal to or greater than 20% of the capital or voting rights of the investee that the insurer has in other insurance or reinsurance entities, in credit institutions, in companies of investment services or entities whose principal activity consists in having holdings in insurance institutions.

(f) Subordinated financing or other non-committed equity securities issued by the entities referred to in the preceding paragraph and acquired by the insurance institution. "

" 2 bis. The deductions referred to in paragraph 2 above shall be effected by their value in the books of the holding entity.

As an alternative to the deduction of the items referred to in paragraphs (e) and (f) of paragraph 2, which the insurance undertaking holds in credit institutions, investment firms and any entity in the financial sector, the insurers may apply the methods set out in the Annex to Royal Decree 1332/2005 of 11 November 2005 on the development of Law 5/2005 of 22 April on the supervision of financial conglomerates and amending other laws of the sector financial. Method 1 (accounting consolidation) shall only apply where institutions falling within the scope of the consolidation have a level of integrated management and internal control in accordance with the provisions of Article 110 of this Regulation. regulation. The method chosen must be applied in a consistent manner.

In any case, entities belonging to insurance groups and financial conglomerates subject to supplementary supervision may not deduct the items referred to in paragraphs (e) and (f) of paragraph 2 which they hold in institutions. credit, investment firms, insurance or reinsurance undertakings or holding companies of insurance entities included in the scope of supplementary supervision. '

Five. Article 67 (1) (e), "Consolidated Group of Insurance Entities", is worded as follows:

" (e) 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 the financial conglomerate that are not controlled by an insurance or reinsurance entity. '

Six. The title of Article 110 and paragraph 1 thereof shall be worded as follows:

" Article 110. Internal control and risk management of insurance entities.

1. Insurance institutions shall establish the appropriate risk management processes and internal control mechanisms, including sound administrative and accounting procedures, as well as having sufficient information to ensure that the risk management process the entity's management may have an up-to-date knowledge of the evolution of its activity, the functioning of its departments and distribution networks, and the behavior of the basic economic-actuarial measures of its business.

The consolidated group of insurance entities, through the entities that make up the group, shall establish the appropriate risk management processes and internal control mechanisms, including administrative and accounting procedures. sound, to ensure the full availability and adequate presentation of all data and information in general are accurate for the preparation and completion of consolidated accounts, including the states of coverage of technical provisions and of consolidated solvency margin. "

Seven. Article 121 is worded as follows:

" Article 121. Administrative records.

Books shall be opened for each of the types of insurance and reinsurance entities provided for in the law and of the organizations for the distribution of risk coverage between entities or for the provision of services. (a) common to its activities, as well as to its senior positions and those of its dominant entity, and to insurance brokers and insurance brokerage companies and their senior positions, all with the necessary breakdown. "

Eight. The first subparagraph of Article 123 (1), 'Administrative register of senior officials of insurance and reinsurance undertakings', is worded as follows:

" 1. Insurance institutions and those whose principal activity consists of participating in insurance institutions must apply for the registration of directors or directors, directors-general or persons who are treated as such, and which under any title will lead to the effective management of the entities. "

Nine. An additional ninth provision is introduced, with the following wording:

" Additional provision ninth. Information to be provided by the Directorate-General for Insurance and Pension Funds to the supervisory authorities of the European Union.

In the cases referred to in paragraphs (a) and (b) of Article 77.2 of the law, the Directorate-General for Insurance and Pension Funds shall inform the Commission of the European Communities and the Commission of the competent authorities of the other Member States. '

Final disposition seventh. Amendment of Royal Decree 2660/1998 of 14 December 1998 on foreign exchange in establishments open to the public other than credit institutions.

Article 4 (3), "Requirements for obtaining and retaining the authorisation to exercise foreign exchange activity", of Royal Decree 2660/1998 of 14 December 1998 on foreign currency exchange establishments open to the public other than credit institutions shall be worded as follows:

" 3. Commercial and professional honorability in those who have been observing a personal trajectory of respect to the commercial laws or others that regulate the economic activity and the life of the business, as well as to the good practices commercial, financial and banking.

In the case provided for in Article 2.1, the requirements of commercial and professional good repute shall be deemed to be met by the existence of an establishment open to the public in which the activity is being carried out. principal of the applicant.

In any case, it will be understood that they lack such good repute who, in Spain or abroad, have a criminal record for intentional crimes, are disabled to exercise public or administrative posts or financial institutions or are disabled in accordance with Law 22/2003, of 9 July, Insolvency, until the period of disablement fixed in the judgment of qualification of the contest has been completed and the broken and unrehabilitated in (a) procedures for prior to the entry into force of that law. "

Final disposition octave. Amendment of Royal Decree 867/2001 of 20 July 2001 on the legal status of investment firms.

Royal Decree 867/2001 of 20 July 2001 on the legal status of investment firms is amended as follows:

One. Paragraph 1 (e) and Article 14 (2), "Requirements for the exercise of their activity", are hereby worded as follows:

" (e) Contar with a board of directors consisting of no less than five members in securities companies, and no less than three in securities agencies and portfolio management companies. All of them, as well as those of their dominant entity, where they exist, shall be persons of recognised business or professional repute and shall possess, at least the majority in each council, appropriate knowledge and experience in related matters. with the stock market to perform its functions. Such good repute, knowledge and experience shall also be enforceable in the general or similar directors of the institution and its parent, where it exists, as well as in the natural persons representing legal persons on the boards of administration. "

" 2. Commercial and professional honorability in those who have been observing a personal trajectory of respect to the commercial laws or others that regulate the economic activity and the life of the business, as well as to the good practices commercial and financial. In any event, it will be understood that they lack such good repute who, in Spain or abroad, have a criminal record for intentional crimes, are disabled for public office or administrative or management of financial institutions. or are disabled in accordance with Law 22/2003 of 9 July, Insolvency, until the period of disablement fixed in the judgment of qualification of the contest has been completed and those who have been broken and are not rehabilitated in proceedings consents prior to the entry into force of that law. "

Two. A new paragraph 3 is inserted in Article 16, "Requirements of the application", with the following wording:

" 3. The National Securities Market Commission shall be responsible for the creation and management of a register of directors and directors-general of the dominant entities, other than credit institutions, investment firms or entities. insurance companies or reinsurers of Spanish investment firms, where the directors, directors and assimilated persons of the companies must be registered. For the purposes of registration, such persons shall communicate their appointment within 15 days of their taking of office, including personal and professional data established by the National Commission of the Securities market and expressly declare, in the document certifying your acceptance of the charge, that they meet the requirements of good repute and, where appropriate, professionalism that are necessary to them, and that there are no courses in any limitation or incompatibility set out in the rules applicable to them. "

Three. Article 19 (1) and (2), "Authorisation of investment firms subject to the control of foreign persons", are hereby drawn up as follows:

" 1. The authorisation for the creation of a Spanish investment firm shall be the subject of prior consultation with the competent supervisory authority of the relevant Member State of the European Union when any of the following circumstances:

(a) that the new undertaking is to be controlled by an investment firm, or a credit institution or an insurance or reinsurance undertaking authorised in that State.

(b) Your control shall be exercised by the dominant undertaking of an investment firm, or a credit institution or an insurance or reinsurance undertaking authorised in that State.

(c) That their control is to be exercised by the same natural or legal persons who control an investment firm, or a credit institution or an insurance or reinsurance undertaking authorised in that State member.

An undertaking shall be deemed to be controlled by another company when any of the assumptions provided for in Article 4 of Law 24/1988 of 28 July of the Stock Market are assumed.

2. The consultation shall be directed by the National Securities Market Commission to the competent equivalent supervisory body of the country of origin of the entity exercising control. It shall, in particular, achieve the assessment of the suitability of the shareholders and the good repute and experience of the managers and directors of the new entity or the parent entity, and may be reiterated for the continued assessment of the compliance by the Spanish investment services companies with those requirements. '

Final disposition ninth. Amendment to the Regulation on pension schemes and funds, approved by Royal Decree 304/2004 of 20 February 2004.

The second subparagraph of Article 75 (2) of the Regulation on pension schemes and funds, approved by Royal Decree 304/2004, is worded as follows:

" At least annually, the properties of the fund must be assessed. The appraisals shall be carried out by an approved valuation entity for the valuation of assets in the mortgage market, in accordance with the rules specific to the valuation of buildings approved by the Ministry of Economy and Finance. The Directorate-General for Insurance and Pension Funds may check and review the securities attributed to the buildings, by way of their technical services. "

Final disposition tenth. Basic character.

This royal decree, which will have a basic character, is dictated by the jurisdiction of the jurisdiction provided for in Article 149.1.11. and 13. of the Constitution.

Final disposition eleventh. Incorporation of European Union law.

By this royal decree the transposition of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary surveillance of the institutions of the European Union is completed. credit, insurance companies and investment entities belonging to a financial conglomerate, amending Council Directives 73 /239/EEC, 79 /267/EEC, 92 /49/EEC, 92 /96/EEC, 93 /6/EEC and 93 /22/EEC, and Directives 98 /78/EC and 2000 /12/EC of the European Parliament and of the Council. This royal decree also incorporates into Spanish law Directive 2005 /1/EC of the European Parliament and of the Council of 9 March 2005 amending Directives 73 /239/EEC, 85 /611/EEC, 91 /675/EEC, 92 /49/EEC and 93 /6/EEC of the Council, and Directives 94 /19/EC, 98 /78/EC, 2000 /12/EC, 2001 /34/EC, 2002 /83/EC and 2002 /87/EC, in order to establish a new organisational structure for the financial services committees.

Final disposition twelfth. Enabling regulatory development.

The Minister of Economy and Finance is empowered and, with his express rating, the Banco de España and the National Securities Market Commission to dictate how many provisions are necessary for the development and implementation of the royal decree.

Final disposition thirteenth. Entry into force.

This royal decree shall enter into force on the day following that of its publication in the "Official Gazette of the State" and shall first apply to the supervision of the accounts for the financial year 2005.

Given in Madrid, November 11, 2005.

JOHN CARLOS R.

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

PEDRO SOLBES MIRA

ANNEX

CALCULATION METHODS

The methods referred to in Article 6.1 are as follows:

Method 1: Accounting consolidation method

1. The calculation of the requirements for the adequacy of the additional capital of regulated entities in a financial conglomerate shall be made on the basis of consolidated accounts.

2. The requirements for the adequacy of the additional capital shall be calculated as the difference between:

(a) The own resources of the financial conglomerate calculated on the basis of the group's consolidated position; the eligible items shall be those deemed eligible in accordance with the relevant sectoral rules; and

(b) The sum of the solvency requirements of each of the financial sectors represented in the group; the solvency requirements of each of the financial sectors shall be calculated in accordance with the sectoral rules corresponding.

3. In the case of non-regulated entities in the financial sector which are not included in the calculations of the sectoral solvency requirements referred to above, a theoretical solvency requirement shall be calculated.

4. The difference will not result in a negative result.

Method 2: Deduction and Aggregation method

1. The calculation of the requirements for the adequacy of the additional capital of the regulated entities in a financial conglomerate shall be carried out on the basis of the accounts of each of the entities in the group.

2. The requirements for the adequacy of the additional capital shall be calculated as the difference between:

(a) The sum of the own resources of each regulated and non-regulated entity in the financial sector of the financial conglomerate; the eligible items shall be those deemed eligible in accordance with the sectoral rules relevant, and

b) The sum of:

1. The solvency requirements of each regulated and non-regulated entity in the group's financial sector; the solvency requirements shall be calculated in accordance with the relevant sectoral rules, and

2. º The book value of the units in other entities in the group.

3. In the case of non-regulated entities in the financial sector, a theoretical solvency requirement shall be calculated. Own resources and solvency requirements shall be taken into account in relation to their proportional share, in accordance with the provisions of Article 6.3 and Article 7.

4. The difference will not result in a negative result.

Method 3: Accounting value/deduction method of requirements

1. The calculation of the requirements for the adequacy of the additional capital of the regulated entities in a financial conglomerate shall be carried out on the basis of the accounts of each of the entities in the group.

2. The requirements for the adequacy of the additional capital shall be calculated as the difference between:

(a) The own resources of the dominant undertaking or of the entity leading the financial conglomerate; the eligible items shall be those deemed eligible in accordance with the relevant sectoral rules, and

b) The sum of:

1. º The solvency requirement of the dominant undertaking or the entity that leads the conglomerate referred to in paragraph (a) above, and

2. The largest between the accounting value of the holding of that holding in other entities of the group and the solvency requirements of those entities; the solvency requirements of those institutions shall be taken into account in relation to their proportional share, in accordance with the provisions of Article 6.3 and Article 7.

3. In the case of non-regulated entities in the financial sector, a theoretical solvency requirement shall be calculated. When assessing the eligible elements for the calculation of the requirements for the adequacy of the additional capital, the shares may be valued by the method of putting into equivalence.

4. The difference will not result in a negative result.

Method 4: Combination of methods

The calculation of the requirements for the adequacy of the additional capital of regulated entities in a financial conglomerate may be carried out by the combination of two or three preceding methods.