Law 3/1994 of 14 April, adapting the Spanish legislation on credit institutions to the Second Banking Coordination Directive and introducing other amendments concerning the financial system, introduced notable changes in banking legislation and, most especially, in Law 26/1988 of July 29 on Discipline and Intervention of Credit Entities.

The new legal framework requires regulatory development, which is the subject of this Royal Decree.

First, the regulation that on the creation of banks contained Royal Decree 1144/1988 of 30 September, incorporating and developing the new rules introduced by Law 3/1994, is replaced. It is worth noting the importance of the right holders of significant shareholdings to be eligible and for the newly established banks to have a good administrative and accounting organisation. It has been considered appropriate to introduce some new provision, not strictly required by Community legislation, but necessary in the light of the supervisory experience of 1988, as is the aim of ensuring that the members of the Board of Directors of a bank are informed of the significant developments related to the entity's progress, so that they can fulfil their obligations and assume their responsibilities.

Second, other provisions of the Law are developed, relating not only to banks, but to all credit institutions. Thus, the regime of cross-border activity, with or without a branch, is given to both Spanish and foreign credit institutions. For the European Union institutions, the so-called "Community passport"-a real key piece for the Single Market for financial services-is regulated in detail, under which a credit institution is authorised in any country. Community, it can operate in other countries without the need for authorization from the authorities of these. There are also some rules for the development of the so-called "significant shareholdings" regime, which are already widely regulated in the new Title VI of Law 26/1988, and other figures related to banking traffic are regulated, such as the agents or representative offices.

In its virtue, on the proposal of the Minister of Economy and Finance, in agreement with the Council of State and after deliberation of the Council of Ministers at its meeting of July 14, 1995,

D I S P O N G O:

TITLE I

Legal framework for the creation of banks

Article 1. Authorization and registration of banks.

1. It will be up to the Minister for Economic Affairs and Finance, after the Bank of Spain, to authorise the creation of banks.

2. In accordance with the provisions of Article 3.6 of the First Council Directive of 12 December 1977 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of the the application for authorization must be settled within six months of its receipt in the Directorate-General of the Treasury and Financial Policy, or at the time the required documentation is completed and, in all case, within 12 months of its receipt. Where the application is not settled within the time limit, it may be deemed to be dismissed. For the effectiveness of the alleged dismissal, the certification of the alleged act referred to in Article 44 of Law No 30/1992 of 26 November of the Legal Regime of Public Administrations and of the Procedure shall be requested. Common Administrative.

3. The banks, to carry out their activities, obtained the authorization and, after their incorporation and registration in the Commercial Registry, must be registered in the Special Register of the Banco de España.

4. The entries in the Special Register referred to in paragraph 3 above, as well as the casualties therein, shall be published in the 'Official State Gazette' and shall be communicated to the European Commission.

Article 2. Requirements for exercising banking activity.

1. They will be necessary to exercise banking activity:

a) Revestir the form of public limited company constituted by the procedure of simultaneous and indefinite foundation.

b) Have an initial share capital of no less than 3 billion pesetas, paid in full in cash and represented by nominative shares.

c) By statutory limitation of the social object to the activities of a credit institution.

d) That shareholders holding significant shares are deemed appropriate, in accordance with the terms set out in this Article and in Article 4.

e) Do not reserve the founders or any special remuneration.

f) Contar with a Board of Directors consisting of no less than five members. All of them shall be persons of recognised commercial and professional good repute and must possess at least the most appropriate knowledge and experience to perform their duties. Such good repute, knowledge and experience must also be provided in the general or similar directors of the institution, as well as in the natural persons representing legal persons who are counsellors.

g) Contar with a good administrative and accounting organization, as well as with adequate internal control procedures that ensure the sound and prudent management of the entity. In particular, the Management Board shall establish appropriate operating rules and procedures to facilitate the fulfilment of all its obligations by all its members and to assume the responsibilities of the Board of Directors. the rules for the management and discipline of credit institutions, the Companies Act, or other provisions that are applicable.

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 the good commercial practices, financial and banking. In any event, it is understood that they lack such good repute as those who have a criminal record or are prosecuted or, in the case of the procedure referred to in Title III of Book IV of the Criminal Procedure Act, The Court of the Court of State held that the Court of State held that the Court of State held that the Court of State held that the Court of State held that the Court of State held that the Court of of secrets or against property; the disabled to exercise public or administration or management in financial institutions; and, broken and non-rehabilitated.

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

4. Banks shall at all times comply with the requirements laid down in paragraph 1 above and have own resources not less than the capital figure referred to in paragraph (b) of this Article, excluding those referred to in the Article 20, paragraph 1 (g) and (h) of Royal Decree 1343/1992 of 6 November 1992. However:

(a) The authorisation may only be revoked for lack of suitability of any shareholder in exceptional circumstances, as provided for in Article 62 of Law 26/1988.

(b) For lack of commercial or professional honorability of directors or directors, only the revocation shall proceed if the persons concerned do not cease in their posts in one month, counted from the receipt of the order for which they are directed the Banco de España. There shall be no lack of good repute for the mere fact that, in the course of his or her duties, a counsellor or director is charged or prosecuted for any of the offences referred to in paragraph 2 above.

(c) No revocation shall be made for insufficient own resources, in the terms indicated, if they reach at least the four fifths of the minimum social capital and the insufficiency does not last for more than 12 months.

5. For registration in the Register of High Charges created by Decree 702/1969, of April 26, the directors and directors general or assimilated of the entity shall expressly state, in the document certifying their acceptance of the charge, that meet the requirements of good repute and, where applicable, professionalism as referred to in this Article, and that there are no incourses in any of the limitations or incompatibilities laid down in Law 31/1968 of 27 July, or in any another rule which is applicable to them.

Article 3. Requirements for the request.

The application for authorization for the creation of a bank will be directed to the Directorate General of the Treasury and Financial Policy in duplicate, and must be accompanied by the following documents:

a) Project of social statutes, accompanied by a registration certificate negative of the proposed social denomination.

(b) a programme of activities, in which the gender of the operations to be carried out, the administrative and accounting organisation and the internal control procedures shall be specified in a specific manner.

(c) The relationship of partners to be the company, with an indication of their holdings in the share capital. In the case of partners with the consideration of legal persons, shares in their capital representing a percentage higher than 5 per 100 shall be indicated. In the case of partners who are to hold a significant participation, they shall also be provided, if they are natural persons, information on their career and professional activity, as well as their status; and if they are legal persons, annual accounts and management report, with the audit reports, if any, of the last two financial years, the composition of its administrative bodies and the detailed structure of the group to which it may belong.

d) Relation of persons who have to integrate the first Board of Directors and of those who have to serve as general or assimilated directors, with detailed information on the trajectory and professional activity of all them.

(e) Justification of having constituted at the Banco de España, in cash or in public debt, a deposit equivalent to 20 per 100 of the minimum social capital provided for in Article 2.

In any case, in the instruction of the procedure, it will be possible for the promoters to require all data, reports or records to be considered appropriate to verify compliance with the conditions and requirements established in this Real Estate. Decree.

Article 4. Refusal of the request.

1. The Minister for Economic Affairs and Finance shall, by means of a reasoned decision, refuse authorisation to set up a bank where the requirements of Articles 2 and 3 are not met and, in particular, where, having regard to the need to ensure sound management, and prudent of the projected entity, the suitability of the shareholders that are to have a significant participation is not considered appropriate. For these purposes:

(a) Significant participation in a bank shall be understood to be such that it reaches, directly or indirectly, at least 5 per 100 of the capital or voting rights of the institution; or the one that, without reaching the indicated percentage, allow to exert a noticeable influence on the same.

b) The suitability will be appreciated, among other factors, depending on:

1. The commercial and professional honorability of shareholders, in the sense provided for in Article 2 (2). This good repute shall always be presumed when the shareholders are public administrations or entities dependents;

2. The heritage resources that these shareholders have to meet the commitments they have made.

3. The transparency in the structure of the group to which the entity may eventually belong and, in general, the existence of serious difficulties in inspecting or obtaining the necessary information on the development of its activities.

4. The possibility that the institution may be exposed, inappropriately, to the risk of the non-financial activities of its promoters, or when, in the case of financial activities, the institution's stability or control may be be affected by the high risk of those.

2. The Bank of Spain shall, without prejudice to the judicial remedies against the decision taken, refuse, where appropriate, the request, and without prejudice to the judicial remedies, to be returned from the deposit made in accordance with the provisions of paragraph (e) of the Article 3. You will also proceed with your return in the event of waiver of the application.

Article 5. Start of activities.

1. Authorized the creation of a bank, within a year to count from its notification, must be the promoters to grant the timely writing of the constitution of the society, to register it in the Commercial Registry and later in the Special Register of the Banco de España, and start its operations. In another case, the authorisation granted, as provided for in Article 57a of the Banking Management Act of 31 December 1946, may be revoked.

2. The deposit provided for in paragraph (e) of Article 3 shall be released after the company has been incorporated and entered in the Special Register of the Banco de España, as well as in the case of revocation of the authorization as provided for in the previous.

Article 6. Temporary limitations to the activity of the new banks.

1. Newly created banks will be subject to the following limitations temporarily:

1. During the first three financial years, starting from the beginning of their activities, they will not be able to distribute dividends, and they must allocate all of their free disposition to reserves, unless authorized by the Banco de España taking into account the financial situation of the institution and in particular the institution's compliance with its solvency obligations.

2. For the first five years from the start of your activities:

(a) They may not, directly or indirectly, grant loans, loans or class guarantees in favour of their members, advisers and senior officials of the institution, nor in favour of their first-degree relatives or of the companies in which, (a) some or all of the shares held by shareholders of more than 15 per 100 or of which the Board of Directors is a party. In the case of shareholders belonging to its economic group, all companies belonging to its economic group are included in this prohibition. This last restriction shall not apply to transactions with credit institutions.

(b) A company or group may not hold, directly or indirectly, more than 20 per 100 of the bank's capital, or exercise its control. For these purposes, group is defined as the group defined as such in Article 4 of Law 24/1988 of 28 July of the Securities Market. This limitation shall not apply to credit institutions and other financial institutions, the latter being understood by the latter as provided for in Article 3 of Royal Decree 1343/1992 of 6 November 1992, which is implemented by Law 13/1992 of 1 June 1992. Own Resources and Supervision on a consolidated basis of financial institutions.

c) The inter-living transmissibility of the shares and their lien or pignororation shall be conditional upon the prior authorization of the Banco de España, with this limitation in the Company's Statute.

2. The applications for authorisation provided for in this Article shall be resolved within two months of their receipt. Where the application is not settled within the time limit, it may be deemed to be dismissed. For the effectiveness of the alleged dismissal, the certification of the alleged act referred to in Article 44 of Law No 30/1992 of 26 November of the Legal Regime of Public Administrations and of the Procedure shall be requested. Common Administrative.

3. Failure to comply with the operational limitations referred to in the preceding number 1, or a substantial deviation from the programme of activities referred to in Article 3 (b) for the first three years may result in the revocation of the authorisation as provided for in paragraph (d) of Article 57a (1) of the Banking Management Act of 31 December 1946.

Article 7. Authorization of banks subject to the control of foreign persons.

1. The creation of Spanish banks whose control, in the terms provided for in Article 4 of Law 24/1988, of July 28, of the Stock Market, will be exercised by foreign persons, is subject to the provisions of the preceding articles of this Royal Decree.

2. In the event that the Spanish bank's control is to be exercised by a credit institution 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 as control a credit institution authorised in another Member State, the Banco de España, before issuing the report referred to in Article 1 (1), shall consult the authorities responsible for the supervision of the credit institution; foreign.

3. Where the Spanish bank's control is to be carried out by one or more persons, whether or not credit institutions, domiciled or authorised in a non-Member State of the European Union, it shall require the provision of a guarantee which it reaches the entire activities of that entity. The authorization may be refused, in addition to the reasons provided for in the preceding articles, when it has been communicated to Spain, in accordance with Article 9 of the Second Banking Coordination Directive, of 15 In December 1989, a decision taken by the Council of the European Union to verify that Community credit institutions did not benefit in that State from a treatment offering the same conditions of competition as their entities National and non-compliance with the conditions of effective market access.

In this case, the Minister of Economy and Finance may also suspend the granting of the authorization or limit its effects.

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, specifying the structure of the group to which the controlled entity belongs.

Article 8. Amendment of the Social Statutes.

1. The amendment of the social statutes of the banks shall be subject to the authorisation and registration procedure laid down in Article 1, but the application for authorisation must be settled within two months of its receipt in the Directorate-General for the Treasury and Financial Policy, which may be deemed to be estimated. For the effectiveness of the presumed estimate, the certification of the alleged act referred to in Article 44 of Law 30/1992, of 26 November, of the Legal Regime of the Public Administrations and Administrative Procedure shall be requested. Common.

2. They shall not require prior authorization, although they shall be notified to the Banco de España for their constancy in a Special Register, the changes to the social statutes which are intended to:

a) Change of the registered office within the national territory.

b) Increase in social capital.

c) Textually incorporate mandatory or prohibitive legal or regulatory precepts, or comply with judicial or administrative decisions.

(d) Those other amendments for which the Directorate-General of the Treasury and Financial Policy, in response to prior consultation of the affected bank, has deemed it unnecessary, due to its limited relevance, the processing of the authorization.

The communication to the Banco de España shall be made within 15 working days following the adoption of the statutory amendment agreement. If, in receipt of the communication, such modification exceeds the scope of this paragraph, the Bank of Spain shall notify the interested parties within 30 days, to review the amendments or, if appropriate, to adjust the Procedure for the authorisation of paragraph 1

TITLE II

Cross-border activity of credit institutions

CHAPTER I

Opening of branches and freedom to provide services in Spain by foreign credit institutions

Article 9. Authorisation of branches of foreign credit institutions.

1. For the purposes of this Title, a branch shall be defined as a branch of a holding which is a party, devoid of legal personality, of a credit institution, which directly or partially carries out the transactions inherent in the the activity of a credit institution; a branch shall be considered to be all operating premises created in the same State by a credit institution having its registered office in another State.

2. The opening in Spain of branches of foreign credit institutions not authorised in a Member State of the European Union will require the authorisation of the Minister for Economic Affairs and Finance, after the Bank of Spain's report. The above articles of this Royal Decree will be observed in the application, with the following particularities:

(a) By minimum social capital, the amount held by the institution in Spain of permanent and indefinite-duration funds, available for the loss coverage of the branch, shall be understood.

(b) paragraphs (a), (d), (e) and (f) of Article 2 (1) shall not apply; paragraph (c) shall not apply, nor shall the reference to the components of the Council in Article 3 (d). The reference to the draft Statute referred to in paragraph (a) of Article 3 shall be understood as referring to the draft constitution of the branch and to the existing Statutes of the credit institution, and shall be reported to the Bank of Spain of the changes that subsequently occur in both.

(c) At least two persons shall have the right to determine the orientation of the branch and be directly responsible for the management. Both the good repute, knowledge and experience referred to in Article 2 shall be required.

d) The social object of the branch may not contain activities not permitted to the entity in its country of origin.

(e) The documentation accompanying the application shall contain the information necessary for the accuracy of the legal and management characteristics of the applicant foreign credit institution, as well as its financial situation. A description of the organisational structure of the entity and of the group in which it is eventually integrated shall also be included. It shall also be established that it is in possession of the authorisations of its country of origin to open the branch, where required, or the negative certification if they are not accurate.

The authorization may also be denied by application of the principle of reciprocity.

3. The opening in Spain of branches of credit institutions authorised in another Member State of the European Union shall not require prior authorisation, or specific allocation of resources, nor shall it be subject to the provisions of the preceding Articles of this Regulation. Royal Decree. However, it shall be conditional upon the Banco de España receiving a communication from the supervisory authority of the credit institution containing at least the following information:

(a) A programme of activities indicating, in particular, the operations it intends to carry out and the structure of the organisation of the branch.

b) The address in Spain where all necessary information may be required from the branch.

c) The name and history of the managers responsible for the branch.

(d) The amount of own resources, as well as the solvency ratio of the credit institution and the consolidable group in which it is eventually integrated.

e) Detailed information about any deposit guarantee system that is intended to ensure the protection of the depositors of the branch.

4. Received the communication referred to in paragraph 3, the Banco de España shall give an account of its receipt to the credit institution and shall then proceed to register the branch in the Mercantile Register, and then in the Special Register of the Banco de España, communicating to this date the effective start of its activities.

The Banco de España may set a waiting period, not exceeding two months from the receipt of the communication from the supervisory authority of the credit institution, for the commencement of the activities of the branch, in order to organise his supervision. It may also indicate, where appropriate, the conditions under which, for reasons of general interest, it must carry out its activity in Spain. In the event that any of the activities reported is not one of those listed in Article 52 of Law 26/1988 of 29 July, and is a prohibited or limited activity for credit institutions, the Banco de España notify this circumstance to the institution and its supervisory authority.

After one year after the credit institution has been notified of the receipt of the communication by its supervisory authority, or since the end of the waiting period set by the Banco de España, without the the branch has opened the branch, the procedure referred to in paragraph 2 must be initiated again.

5. If, once the branch is opened, the foreign credit institution intends to amend the content of any of the information referred to in paragraph 2 (a), (b), (c) or (e), it shall inform the Bank of Spain, without prejudice to the The Bank of Spain shall provide the Bank of Spain with the following information to the Bank of Spain and to the supervisory authority of the Bank of Spain, which shall be able to act in accordance with the preceding paragraphs. The Bank of Spain must also be notified of the closure of the branch, at least three months in advance of the planned date.

Article 10. Representative offices.

Representation offices may not carry out credit, deposit-taking, or financial intermediation operations, or provide any other type of banking services, and should be limited to carrying out activities merely informative or commercial on banking, financial or economic issues. However, they may promote the channelling of third-party funds, through credit institutions operating in Spain, to their source entities, and to serve as material support for the provision of services without establishment Article 54 of Law 26/1988 of 29 July.

It will be for the Banco de España to authorize the installation in Spain of offices representing foreign credit institutions. The application shall specify the activities to be carried out, as well as the name and history of the natural person to be charged. The request shall be made by the Bank of Spain within a maximum of three months from its receipt, after which, without any express statement, the application may be deemed to be deemed to be. For the effectiveness of the presumed estimate, the certification of the alleged act referred to in Article 44 of Law 30/1992, of 26 November, of the Legal Regime of Public Administrations and of the Procedure must be requested. Joint Administrative. Subsequent changes of domicile of the office of representation, of the scope of its activities or of the person in charge, as well as its closure, shall be communicated to the Bank of Spain.

Article 11. Provision of services without a branch by a foreign credit institution.

1. In Spain, for the first time, activities under the freedom to provide services, by credit institutions authorised in another Member State of the European Union, may be initiated once the Banco de España receives a communication from your supervisory authority indicating the activities to be carried out. Such a scheme shall apply provided that the credit institution intends, for the first time, to carry out an activity in Spain other than those contained in that communication.

2. Where a foreign credit institution, which is not authorised in another EU Member State, intends to provide services without a branch in Spain, it must inform the Banco de España in advance, indicating the activities to be carried out. The Banco de España may request an extension of the information provided, as well as condition the exercise of those activities to the fulfilment of certain requirements as a guarantee of compliance with the rules dictated for reasons of interest. general.

Article 12. Action by credit institutions through financial institutions.

1. The administrative arrangements for credit institutions authorised in a Member State of the European Union in Articles 9 and 11 of this Royal Decree shall apply to the opening of branches and the freedom to provide services in Spain. for financial establishments authorised or domiciled in another Member State of the European Union which meet the following requirements:

(a) The consideration of financial institutions shall be those of non-credit institutions whose principal activity is to acquire holdings in other entities or to exercise one or more of the activities which are listed in Article 52 of Law 26/1988 of 29 July on Discipline and Intervention of Credit Entities, except those provided for in paragraphs (a), (m) and (n).

(b) Such financial establishments shall be controlled by one or more credit institutions which have their same nationality and who also hold 90 per 100 or more of the voting rights.

(c) Financial establishments must be subject to a legal regime which enables them to carry out the activities they intend to carry out in Spain, and must effectively carry out such activities in the State where they are located. have their address.

(d) The dominant credit institutions must have demonstrated, to the satisfaction of their supervisory authorities, that they conduct prudent management of the financial institutions and, with the consent of those authorities, have been jointly and severally declared to the undertakings given by those establishments.

e) Financial institutions and their dominant credit institutions shall be subject to supervision on a consolidated basis according to the applicable prudential legal criteria.

2. The communication to the Banco de España referred to in Article 9 (3) shall contain the following:

1. º Certification issued by the supervisory authority of the controlling entity or credit institutions that accredit compliance with the requirements related to the previous paragraph;

2. The other extremes required in the case of establishment of branches or freedom to provide services by credit institutions authorised in other Member States of the European Union. However, the information provided for in Article 9 (3) (d) and (e) shall be replaced, respectively, by information on the own resources of the financial establishment and on the consolidated solvency ratio of the a dominant entity, as well as information on the investor guarantee scheme to which the financial establishment may eventually be attached.

3. Where the special activity of any of the financial institutions referred to in the preceding paragraphs corresponds to that carried out in Spain by the credit institutions established by the first provision of the Law 3/1994, the Banco de España, once the formalities provided for in Article 9 (3) have been completed, will register the branches in Spain of these establishments in the corresponding Special Register. Where such activity is carried out in Spain by a category of financial institutions subject to the control of another national supervisory authority, the Bank of Spain shall transfer to that authority the communication received from the supervisory authority of the Member State of the European Union where the establishment has been authorised or domiciled; that authority after the branch has entered the Trade Register, shall register it in its registers and may fix the waiting period for the establishment of the referred to in Article 9 (4) by making the indication therein. The Banco de España will account for this transfer to the financial establishment.

4. If a financial establishment fails to meet any of the conditions laid down in paragraph 1, it shall immediately inform the Bank of Spain thereof; an administrative authorization shall be required for the exercise of the activities of the In the case of a branch in Spain, the branch shall be required within six months to obtain such authorisation or to close the branch. As long as the authorisation is not obtained, the competent national supervisory authority may limit or condition the exercise of its activity.

CHAPTER II

Opening of branches and free provision of services abroad by Spanish credit institutions

Article 13. Opening of branches abroad by Spanish credit institutions.

1. Spanish credit institutions intending to open a branch abroad must first apply to the Banco de España, accompanied by the information of the State in whose territory they intend to establish the branch and the registered office. provided for in Article 9 (3) (a) and (c) of this Royal Decree.

2. The Bank of Spain shall, by means of a reasoned decision, decide within a maximum period of three months from the receipt of all information. Where the application is not settled within the time limit, it may be deemed to be dismissed. For the effectiveness of the alleged dismissal, the certification of the alleged act referred to in Article 44 of Law No 30/1992 of 26 November of the Legal Regime of Public Administrations and of the Procedure shall be requested. Joint Administrative. Where the branch is intended to be opened in the territory of another Member State of the European Union, the application may be refused only by the Banco de España when it has reason to doubt, in view of the project in question, the adequacy of the the administrative structures or financial situation of the credit institution, or where activities not authorised to the institution are provided for in the programme of activities presented. If the branch is intended to be opened in a non-member State of the European Union, the Banco de España may refuse the application, in addition to the reasons stated, considering that the branch's activity is not to be subject to effective control. by the supervisory authority of the host country, or by the existence of legal or other obstacles preventing or hindering the control and inspection of the branch by the Banco de España.

3. Where the branch is to be established in another Member State of the European Union, the Banco de España, within the period of three months referred to above, shall, where appropriate, transfer the authorisation to the competent authority of that State, accompanying your communication the information contained in Article 9 (3) of this Royal Decree. Such communication shall be transferred to the requesting entity.

4. Any modification of the information referred to in paragraph 1 shall be communicated by the credit institution, at least one month before it is made, to the Banco de España.

A relevant modification may not be made in the branch's program of activities if the Bank of Spain, within a period of one month, objects to it, by means of a reasoned resolution that will be notified to the institution. Such opposition shall be based on one of the causes referred to in paragraph 2 of this Article.

Article 14. Representative offices.

The Spanish credit institutions, prior to the eventual request that they are required to make to the foreign authorities, must inform the Banco de España of their intention to open a representative office in the foreign, specifying the activities to be performed. They will also notify you of your opening, once carried out, and your closure.

Article 15. Provision of services without a branch abroad.

Spanish credit institutions which intend, for the first time, to carry out their activities under the freedom to provide services in another State, must inform the Bank of Spain in advance, indicating the activities for which is authorised to be carried out. Where the services are to be provided in another Member State of the European Union, the Banco de España shall forward that information to the competent authority of that State within the maximum period of one month from its receipt, giving the communication to the entity itself.

Article 16. Action by financial establishment.

The provisions of the foregoing Articles may be applied to the provision of services, directly or through the opening of a branch, in other Member States of the European Union, by those financial institutions. Spain, which is controlled by Spanish credit institutions, complies with the arrangements provided for in Article 12 of this Royal Decree. The application shall also be signed by the dominant credit institution or entities.

Where the financial establishment is subject to the supervision of an authority other than the Banco de España, the Bank of Spain shall take account of the application to that authority and, in the case of opening branches, shall refuse the authorisation. if that authority objects to it in the light of the causes referred to in Article 9 (3). For subsequent actions, the specific supervisory authority shall be directly competent. However, it shall be for the Bank of Spain to ensure that the conditions laid down in Article 12 are maintained.

Article 17. Action by other credit institutions.

1. The scheme provided for in Article 30a (5) of Law No 26/88 shall apply both to the alleged creation of a foreign credit institution or to the acquisition of a holding in an already existing entity. directly, as in the case of indirect transactions, through controlled entities, by the credit institution or group of credit institutions concerned.

2. In the case of the creation of a participation, the application for authorisation which is submitted to the Banco de España shall, at least, accompany the following information:

a) Amount of the investment and the percentage that represents the participation in the capital and the voting rights of the entity to be created. Indication, where appropriate, of the entities through which the investment will be made.

(b) The provisions of Article 3 (a), (b) and (d). The provisions of paragraph (c) shall be replaced by a list of the partners who are to have significant holdings.

c) A complete description of the banking regulations applicable to credit institutions in the State in which the new entity is to be established, as well as the current rules on tax and prevention of money laundering. money.

3. Where a holding is to be acquired, it shall be understood to be of a significant nature, as provided for in Article 56 of Law 26/1988, or to increase a significant share, reaching or exceeding any of the percentages referred to in Article 57 (2) of that Law, the information referred to in the preceding paragraph shall be submitted, but the information provided for in paragraph (b) may be limited to those data which are of a public nature. It shall also indicate the time limit for the implementation of the investment, the annual accounts of the last two financial years of the participating institution and, where appropriate, the rights of the institution in order to designate representatives in the administration and management of that.

4. In any event, it shall be appropriate for applicants to require the applicants for any data, reports or records to be deemed appropriate for the Bank of Spain to be able to give an appropriate opinion and, in particular, to assess the possibility of exercising supervision. consolidated group.

TITLE III

Other issues relating to the legal status of credit institutions

Article 18. Significant holdings in credit institutions.

1. For the purposes of Title VI of Law 26/1988, the actions, contributions, or voting rights to be included in a meaningful participation shall include:

a) Those acquired directly by a natural or legal person.

(b) Those acquired through companies controlled or engaged by a natural person.

(c) Those acquired by companies incorporated in the same group as a legal person, or participated by entities in the group.

d) Those acquired by other persons acting on their behalf or in concert with the acquirer or with companies in their group.

2. Controlled companies shall be considered to be those in which the holder holds the control within the meaning of Article 4 of Law 24/1988 and has participated in those companies in which one of the percentages provided for in Article 185 of the Law of Companies Anonymous. 3. Indirect holdings shall be taken for their value, where the holder is in control of the holding company, and as a result of applying the percentage of participation in the holding, otherwise.

4. Where a significant share is held, in whole or in part, indirectly, the changes in the persons or entities through which such participation is held shall be communicated in advance to the Bank of Spain, which may be opposed as provided for in Article 58 (1) of Law 26/1988.

5. To those same effects, the possibility of appointing or removing any member of the Board of Directors of the credit institution shall in any event be understood as a notable influence.

Article 19. Information on the capital structure of credit institutions.

1. Irrespective of the obligation laid down in Article 61 (1) of Law No 26/1988 of 29 July, credit institutions shall communicate to the Bank of Spain in the form it establishes:

(a) For the month following each calendar quarter, the composition of its share capital, relating to all shareholders, in the case of banks, or all holders of contributions, in the case of credit unions, at the end of that period, they shall be considered as financial institutions and those which do not, in the absence of such financial institutions, have shares or contributions which represent a percentage of the share capital of the institution equal to or greater than 0,25 per 100, in the case of banks, or 1 per 100 in the case of credit unions.

(b) As soon as they are known to the credit institution, the transmissions of shares or contributions involving the acquisition by a person or group within the meaning of Article 4 of Law 24/1988 of 28 July of a percentage equal to or greater than 1 per 100 of the entity's share capital.

2. 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 same, in the sense of Article 4 of Law 24/1988.

Article 20. Advertising of shareholdings.

1. Credit institutions shall include in annual memory:

(a) Individual information on holdings in their own capital, at the end of the financial year, held by credit institutions, national or foreign, or by groups within the meaning of Article 4 of the Law on the Market Securities, where any national or foreign credit institution is integrated, where the holding is equal to or greater than 5 per 100 of the capital or voting rights of the institution.

(b) Individual information of the entity's holdings in the capital of other credit institutions, domestic or foreign, where such holdings reach or exceed the percentage referred to in subparagraph (a).

2. In the consolidated groups of credit institutions, the information required in the preceding number shall be included in the group's memory and shall refer, in the case of paragraph (a) above, to holdings in any of the institutions of credit institutions. (b) to which the group owns the group, and in the case of paragraph (b), to which the group has the group.

Article 21. Operational offices.

Credit institutions may freely open new offices on national territory at any time. This is without prejudice to the system of prior authorization to which they may be subject in accordance with the provisions of Article 11 (3) of Law 13/1985 of 25 May 1985 and of the restrictions which may, where appropriate, contain the Social statutes of the entities.

Article 22. Agents of credit institutions.

1. For the purposes of this Article, agents of credit institutions shall be deemed to be the natural or legal persons to whom a credit institution has granted powers to act habitually in respect of the customers, in the name and on behalf of the a sending entity, in the negotiation or formalisation of transactions typical of the business of a credit institution. This does not include the governors with powers for a single specific operation, nor for persons who are linked to the entity, or to other entities in the same group, for an employment relationship.

2. The activity of the agents may not extend to the formalisation of endorsements, guarantees or other risks of signature.

3. The agency contracts referred to in this Article shall be concluded in writing and shall specify the classes of operations in which the staff member may act.

4. Credit institutions operating in Spain shall inform the Banco de España once a year, in the manner in which it determines, the relationship of its agents, indicating the extent of the representation granted; this relationship shall be updated with the new representations granted or with the cancellation of existing ones, as soon as they occur. The agent relationship shall be included in an annex to the annual memory of the entities.

The Banco de España may collect from the represented entities and also its agents any information it deems necessary on the matters relating to the matters covered by its jurisdiction.

5. In the case of agency contracts, credit institutions shall require their staff to make clear their character in how many relationships they establish with the customer, by identifying the represented entity in an unequivocal manner.

6. The credit institution shall be responsible for compliance with the rules of organisation and discipline in the acts carried out by the staff member. For these purposes, it must develop appropriate control procedures.

7. An agent may only represent a credit institution or entities in the same consolidated group of credit institutions.

8. The agents of credit institutions may not act by means of subagents.

9. Where, in the agency contract, the agent is provided with or provides cash, cheques or other payment instruments to the agent, the latter may not be paid to or from the bank accounts of the staff member. transiently.

10. Without prejudice to the provisions on the provision of services in Articles 11 and 15, Spanish credit institutions which conclude agreements with other foreign credit institutions for the provision of financial services to the customers, on behalf or on behalf of the other entity, or agency within the meaning of paragraph 1 of this Article, shall notify the Bank of Spain of the name of the correspondent and the services covered within one month of the from the formalization of the agreement.

11. Where the performance of operations provided for in the Securities Market Act is contemplated in agency contracts, credit institutions and their agents shall also comply with the rules contained in that Act and its implementing rules.

Additional disposition first. Activities related to the stock markets.

When the administrative procedures provided for in this Royal Decree result that a credit institution intends to carry out activities related to the securities markets, the Banco de España will make this knowledge of the National Securities Market Commission, specifying the activities to be carried out and indicating, where appropriate, whether they are intended as a member of a recognised organised market.

Additional provision second. Amendment of Decree 1838/1975 of 3 July on the creation of Boxes of

Saving and distributing the liquid benefits of these entities.

The following wording is given to Article 4 of Decree 1838/1975 of 3 July on the creation of savings banks and the distribution of the liquid profits of these entities:

" The minimum endowment fund permanently linked to the founding capital will be 3 billion pesetas.

Savings Banks shall at all times have a good administrative and accounting organisation, and with appropriate internal control procedures, to ensure the sound and prudent management of the institution. "

Additional provision third. Amendments to Royal Decree 84/1993, of 22 January, approving the Regulation of the Development of Law 13/1989, of 26 May, of Credit Cooperatives.

The following amendments are made to Royal Decree 84/1993, which approves the Regulation of the Credit Union Law:

Article 2 (1) (b) is worded as follows:

" (b) Have an initial share capital that reaches the amounts set out in Article 3 of this Regulation or at all times have own resources not less than those amounts. For these purposes, the elements referred to in Article 20 (1) (g) and (h) of Royal Decree 1343/1992 of 6 November 1992 shall be excluded from the own resources. '

Paragraphs (a), (b) and (c) of Article 3 (1) are worded as follows:

" a) Local credit cooperatives that will operate in municipalities of less than 100,000 inhabitants of law: 175 million pesetas.

(b) Local credit co-operatives not included in the previous paragraph, or in the following paragraph, or supralocal scope without exceeding an Autonomous Community: 600 million pesetas.

(c) Credit cooperatives with headquarters or scope that includes the municipalities of Madrid or Barcelona or of a supra-regional, state or higher level: 800 million. "

Additional provision fourth. Authorisation for the transformation into banks of companies already incorporated.

The authorisation for processing into a bank may be granted to companies which are already incorporated only in the case of a credit institution falling within the first subparagraph, (d) or the second subparagraph of paragraph 2 of the Article 1 of the Royal Decree 1298/1986 of 28 June, in the wording given by Article 5 of Law 3/1994, or of a financial establishment of credit of those created under the additional provision of Law 3/1994. In order to obtain the authorization, it is necessary to comply with the requirements of Title I of this Royal Decree, but in relation to that provided for in paragraph 1 (b) of Article 2, it shall be understood that the sum of the assets the net result of a recent audited balance sheet and the cash contributions reach 3 billion pesetas; in addition, the authorisation may be granted for the purpose of complying with the time limits laid down in Article 6.

Additional provision fifth. Repayable funds from the public.

For the purposes of the prohibition contained in paragraph 2 (b) of Article 28 (2) of Law 26/1988 of 29 July, liabilities that are the counterpart of payment instruments are considered to be repayable from the public. such as gift cheques or prepaid electronic cards; however, this will not reach those instruments of this nature which can only be used for the purchase of the goods sold or services provided by the issuer of the instrument.

Additional provision sixth. Amendments to Royal Decree 1369/1987 of 18 September establishing the National System of Electronic Compensation.

The following modifications are introduced in Royal Decree 1369/1987 of 18 September 1987:

1. New wording is given to Article 2 (2) of Royal Decree 1369/1987 of 18 September 1987, with the following text:

" In the performance of the functions mentioned in the preceding number, the Banco de España will act with the advice of a Commission chaired by a representative of the Commission, appointed by its Executive Committee, and composed of ten Members: six appointed by the Spanish Private Banking Association, three appointed by the Spanish Confederation of Savings Banks and one more appointed by the representative organizations of the Credit Union. The Banco de España shall address the above representative entities to appoint the relevant members of the Commission.

With regard to the representative entity of the Credit Unions referred to in the preceding paragraph, the Banco de España shall identify that entity by means of a consultation between the Cooperatives that are members of the National System.

The Banco de España is empowered, when the evolution experienced by the Spanish payment system justifies it, to modify the internal composition of the Advisory Commission, proceeding to a redistribution of the members of the the different entities in it represented. "

2. New wording is given to Article 3.1 of Royal Decree 1369/1987, of 18 September, with the following text:

" Members of the National System may be members of the credit institutions operating in Spain and entered in the mandatory Official Records of the Banco de España, as well as the latter.

In no case can credit financial institutions be. "

First transient disposition. Credit institutions that have own resources lower than the social capital or minimum endowment fund.

The credit institutions which at the date of entry into force of this Royal Decree have own resources, adjusted with the deduction provided for in Article 2 (4) of this Royal Decree, lower than the social capital or minimum endowment fund established for newly created entities shall, as long as they are in that situation, comply with the following rules:

a) Dealing with banks, they will not be able to reduce their share capital, nor will they repay contributions to their partners. The Savings Banks will not be able to reduce their endowment fund.

(b) Adjusted own resources may not be lowered from the highest level they have reached as of the date of entry into force of this Royal Decree, unless, as a result of a reorganisation operation which has the purpose of reconstituting its solvency, the Bank of Spain to authorize it temporarily. In the Credit Union it will be conditional on the maintenance of this level the reimbursement of contributions to its members.

(c) They must raise their own resources adjusted to the minimum level indicated in their respective rules when changes in the composition of their share capital entailing the existence of new dominant partners or control groups within the meaning of Article 4 of Law 24/1988 of 28 July of the Stock Market.

(d) Where a merger takes place between two or more entities whose own adjusted own resources do not meet the minimum social capital figures provided for, at the time the merger is recorded in the Commercial Register The basic own of the resulting entity shall, unless expressly authorised by the authority to be resolved by the merger, reach the minimum capital required for the newly created entities.

Second transient disposition. Credit institutions or branches pending approval.

The promoters of files for the creation of credit institutions, or the opening of branches in Spain, which are pending authorization to the date of entry into force of this Royal Decree, will have a deadline of three months to adapt their applications, where appropriate, to their content. After that period without having carried out the said adaptation, it shall be understood that the applications shall not be removed and the deposits constituted for that purpose shall be returned.

Single repeal provision.

1. Any provisions of equal or lower rank shall be repealed with respect to this Royal Decree and in particular:

(a) Royal Decree 1144/1988 of 20 September 1988 on the creation of private banks and installations in Spain of foreign credit institutions, although Articles 1 to 8, to which the Royal Decree refers, will remain in force. 771/1989 of 23 June 1989 laying down the legal arrangements for credit institutions with limited operational scope, for the purposes provided for in that provision.

(b) Paragraph (c) of Article 9.1 and the fourth transitional provision of Royal Decree 84/1993 of 22 January 1993 on the adoption of the implementing regulation of Law 13/1989 of 26 May of Credit Cooperatives.

2. The additional provision 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 financial institutions is hereby repealed.

Final disposition first. Standards for development and implementation.

Without prejudice to the specific forecasts contained in this Royal Decree, the Minister of Economy and Finance or, with his express rating, the Bank of Spain, may make the necessary arrangements for its development and execution.

Final disposition second. The basic character of the rule.

This Royal Decree is dictated in accordance with the provisions of Article 149.1.11. and 13. of the Constitution.

Final disposition third. Entry into force.

This provision shall enter into force on the day following that of its publication in the Official Gazette of the State.

Given in Madrid on July 14, 1995.

JOHN CARLOS R.

The Minister of Economy and Finance,

PEDRO SOLBES MIRA