Royal Decree-Law 2/2012, On 3 February, Cleaning Up Of The Financial Sector.

Original Language Title: Real Decreto-ley 2/2012, de 3 de febrero, de saneamiento del sector financiero.

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EXHIBITION of reasons I four years later the home of the international financial crisis, confidence in the financial sector and restricting credit problems persist. Despite the various measures that have been carried out both by States individually as for coordination at the international level, the continuing problems of liquidity and financing together with the strong deterioration of the assets of credit institutions have increased the difficulties of access to finance with severe effects on the real economy.

In this context, the duration, intensity, and extent of the crisis have been shown the fundamental problems which accused the Spanish banking sector and which prevent you from today to meet its essential role of channelling of credit to the real economy, in support of entrepreneurship, employment, and consumption.

The main burden of the Spanish banking sector is the extent of its exposure to assets related to the real estate sector, active suffered from a strong deterioration due to recent developments in the economy.

Indeed, doubts regarding the valuation of such assets and the significant increase in loans classified as doubtful generate perverse effects both on the own financial sector, making it difficult to access the Spanish wholesale financing entities, as the real sector to worsen the credit squeeze.

One of the main consequences of the current crisis and the contraction of demand for financial services is oversizing of the Spanish banking sector. Excess installed capacity that presents and the structure of costs arising from this hinders the efficiency and capacity of our institutions to compete.

In this context, the effects of regulatory efforts and supervisors developed to date, international, community and national levels, have been limited without be able to avoid the worsening of conditions in which must operate Spanish institutions.

Since the beginning of the crisis in 2008, measures taken at the international level have been inspired by the desire to correct the failures of the financial market turmoil showed. The aim was to prevent or at least limiting the consequences of future financial crises in the rest of the economy. These measures included intensification of prudential supervision, from a macro-prudential perspective and the adoption of more stringent requirements of equity and liquidity for credit institutions both at the level of individual institutions. To complement this new regulatory and supervisory framework, were at the service of troubled institutions reinforced guarantees schemes, mechanisms promoting liquidity and even public funds to assist in recapitalization and restructuring them.

In the Spanish case, the landmarks that today characterize the reform of the financial system include the establishment of the Fund for the acquisition of financial assets (FAAF) to grant support to the liquidity of credit institutions and the strengthening of the procedures of intervention, discipline and solution entities through the Royal Decree-Law 9/2009 which created the Fund for orderly bank restructuring (FROB) which articulates a mechanism of temporary support as an incentive for a readjustment of the capacity of the sector.

The legal system of savings through the Royal Decree-Law 11/2010, 9 July, governing bodies and other aspects of the legal regime of the savings banks, as a result of which it was intended to achieve a greater professionalization of the boxes of savings and, above all, provide the ability to access basic capital markets was subsequently reformed.

Finally, with Royal Decree-Law 2/2011 18 February, for the strengthening of the financial system was strengthened the level of solvency of all credit institutions, increasing minimum capital requirements both in terms of quantity and quality.

All these measures have aimed to eliminate the cyclical weaknesses of Spanish credit institutions in the context of shortage of liquidity that has existed since the beginning of the crisis. However, so far leading forecasts not taken to achieve the consolidation of the balance sheets of credit institutions, adversely affected by the deterioration of its assets linked to the real estate sector. Warned the impact of the deterioration on the soundness of our financial system, it is imperative to design a comprehensive strategy for reform that affects the valuation of these assets and involves cleaning up the balance sheets of Spanish credit institutions in a transparent process, to a degree such that to recover the credibility and confidence in the Spanish system.

You have a few healthy balances is a basic requirement for financial institutions to fulfil their key role in channelling savings towards efficient investment projects that promote activity, growth and employment. To this end, allowing financial institutions to start the fiscal year 2013 with their healthy accounts, measures which will improve confidence, credibility and strength of the system. You will also facilitate better access of entities to the capital markets, which will help the flow of credit to the real economy.

The other two fundamental axes of this renewed momentum of financial reform are creating incentives that promote adequate and efficient adjustment of excess capacity and the strengthening of the governance of the entities resulting from integration processes. A last fundamental feature of this reform is that its cost should be assumed entirely by the financial sector.

Title I II contains measures relating to the consolidation of the financial sector. It is, essentially, to articulate new requirements of provisions and capital oriented exclusively to coverage of the deterioration in the balance sheets, additional banking caused by assets linked to the real estate business. Thus, to an improvement in the prudential treatment of credit risk which might still be struggling with the Spanish financial sector balance sheets, while you try to dispel the uncertainties that are hindering its normalization and recovery of their channels to the real economy saving function.

The central axis of the cleaning up of balance sheets is articulated through a new scheme of coverage for all funding and assets awarded or received in payment of debt related to real estate. This new regime is established while remain extraordinary uncertainty which, due to lack of sufficiently deep markets in volume and importance of transactions, exist on the valuation of assets related to land for real estate development in Spain and with the buildings or real estate developments in Spain of all kinds of assets, both in course as completed. These new requirements respond to the effective situation today of the real estate assets of credit institutions, designed realistically to get a reasonable estimate of the decline for the whole of the portfolios of these assets, which should be recognized in accordance with the applicable accounting framework in Spain. Imposed a new requirement of additional capital of the highest quality (primary capital), on the same basis of doubtful or substandard coverage or adjudicated in payment arising from the funding of land for real estate development.

Adjustment of institutions to these new demands will have to run during this same year 2012, so, before March 31, they will have to submit to the Bank of Spain its strategy of adjustment to comply due to the exercise of sanitation. In this way, the positive effects on confidence, transparency and sustainability of our financial sector must be achieved without further delay.

He has also established a mechanism of flexibility for those entities that require organizational changes of a structural nature to undertake the adjustments arising from the new legal requirements. Thus, expand deadlines to comply with the settings. Those credit institutions that carry out integration processes during the year 2012, will benefit from an additional period of 12 months to comply with the new requirements. So credit institutions eligible for the planned regime, it is necessary that the integration process meets a series of requirements. These requirements are intended to ensure that the process of integration has a minimum volume significantly, to commitments and targets are included as measures for the improvement of the corporate governance of institutions, to the increase of the credit to families and small and medium-sized enterprises, or to the placing on the market of the real estate assets owned by the entities.

III Moreover, title II makes some adjustments in the Real Decree-Law 9/2009, of 26 June on bank restructuring and reinforcement of the resources of credit institutions, to facilitate the role of the FROB in the new regulatory context.
In regard to article 9 of the Royal Decree-Law 9/2009, relative to instruments for the reinforcement of the resources of credit institutions, this Royal Decree-law comes to certain adjustments or upgrades necessary. Restricts the runway for financial support from the FROB to the acquisition of shares, except for the competitive process of divestment, which may be accompanied by another type of help tools. Also, the time of divestment from five to three years is reduced. Finally, proceed to the abolition of the possibility that had the FROB of divest, within the period of one or two years, titles acquired the same CAs or third party investors proposed by the beneficiary of its action.

In relation to article 10 of Royal Decree-Law 9/2009, the main change introduced is enlargement of the instruments that you can purchase the FROB to include those convertible into shares, far exceeding the previous framework circumscribed by preference shares.

IV the title III provides for the modification of the Royal Decree-Law 11/2010, July 9, of governing bodies and other aspects of the legal regime of the savings banks.

On the one hand, is intended to simplify the organizational structure and the operational requirements of the savings banks that pursue their activities indirectly. Thus, the governing bodies are reduced to the General Assembly and the Board of Directors, the Supervisory Board being optional. In the same way, refers to the number of members of the governing bodies as well as the periodicity of its meetings shall be determined by the statutes of the savings bank according to the economic dimension and the activity of the entity, so there is an adjustment and downsizing of the organizational structure of savings banks to a new reality in which they have been learned of all financial activity carried out.

On the other hand, sets a limit on the disposal of surplus obtained savings banks so that, without prejudice to compliance with provisions of the regulations of own resources, savings of indirect exercise not requirements may be more than 10% of their surplus of freely available for expenses other than those corresponding to the social work. And this notwithstanding that the fate of percentages above necessary to meet essential entities operating expenses can be authorized. Also, provisions are introduced to simplify operation, frequency and form of call of the General Assembly.

Continuing the line of simplification of the operation of the savings banks of indirect exercise, disclaims them expressly the fulfilment of the obligations concerning service to the customer, which, in any case, must be fulfilled by the credit institution through which exercise their activity. The Bank of Spain may adapt or equally exempt from compliance with the organizational requirements in terms of internal control, audit and risk management in law 13/1985, of 25 may, and its implementing regulations.

Finally, a reference to the so-called is inserted into boxes to reduce their participation so that it does not reach 25% of the voting rights, so-called which also must renounce the authorization to act as a credit institution, although they remain a controlling position.

In these cases of loss of control or reduction of participation below the designated limit, savings banks will lose their credit status and will be transformed into a special Foundation. Establish certain specificities for the special character of State-level foundations.

The title IV v contains the rules applicable to the remuneration of the directors and management of credit institutions have pointed out or need in the future financial support from the Fund for orderly bank restructuring. Such a regime based on a distinction between entities owned mostly by the Fund and those which, otherwise, have been assisted, imposing stricter regulations for the first. The rules laid down in this title do not but continue the path marked by the recommendations of the Financial Stability Board (FSB) and the European Commission, the Directive 76/2010/EU, November 24, 2010 and the rules which have been incorporated into Spanish law this last. In addition, the established regime has taken into consideration the content of the report on remuneration issued on 27 January by the Bank of Spain in response to the request of the Minister of economy and competitiveness.

VI in the final part of the standard is introduced a treatment special and more flexible for those credit institutions that have outstanding preferred shares or mandatory convertible debt instruments issued before the entry into force of this Royal Decree. They may include in the plan of compliance to develop, the application defer the payment of the remuneration provided for despite the absence of profits or reserves available for distribution or the existence of a deficit of own resources. At the same time, modifies the transient third provision of the Royal Decree-Law 2/2011 February 18, for the strengthening of the financial system, making some requirements of these mandatory convertible debt instruments to your computer as the main capital.

Finally, in order to facilitate the management of the financial guarantees that give financial institutions in favour of the Bank of Spain, the European Central Bank or other national central banks of the European Union, amending the additional provision of law 13/1994 of 1 June, sixth of autonomy of the Bank of Spain. This will result in a reduction in the operating costs of these actions in addition to favorably affect operations that financial institutions carry out with the Eurosystem, stressing, in particular, a greater ease of operation to receive the same funding.

Ultimately, the adoption of the measures provided for in this Royal Decree-law leads to the strengthening of the financial sector by way of undertaking the necessary sanitation of your financial situation. The effects of the housing crisis on the balance sheets of institutions have generated a spiral of uncertainty on the whole of the sector which may not be extended more. It is, therefore, imperative and unavoidable in the current economic context, intervene legislatively in order to eliminate the uncertainties about our financial stability and help strengthen confidence in our financial system, getting that positive dynamics which generate credit and facilitate access to financing by our businesses and families caused. Therefore, such measures required to go to the procedure of Royal Decree-Law, meeting the requirements of article 86 of the Spanish Constitution in terms of its extraordinary and urgent need.

By virtue, making use of the authorisation contained in article 86 of the Spanish Constitution, a proposal from the Minister of economy, competitiveness and prior deliberation of the Council of Ministers at its meeting of February 3, 2012, I have: title I article 1 credit institutions sanitation. Measures for cleaning up the balance sheets of credit institutions.

1. to financing and assets awarded or received in payment for debts existing at December 31, 2011 and refinance them at a later date, and the aforementioned date have a distinct from normal risk classification from related with the land for real estate development and constructions or promotions real estate, corresponding to the activity in Spain of credit institutions, will you apply estimation rules contained in annex I to determine its deterioration.

2. of the total amount of financing of specified nature in paragraph 1 which, at December 31, 2011, were classified as normal risk, will be a one-time coverage from 7% of your outstanding balance at that date. The amount of coverage may be used by institutions exclusively for the incorporation of the specific coverages that may be necessary as a result of the rear as doubtful assets reclassification or substandard any such financing or the award or receipt of assets in payment of these debts.

3. the consolidated groups of credit institutions, as well as non-integrated in a consolidatable group, credit institutions which, in accordance with the provisions of article 1 of the Royal Decree-Law 2/2011, 18 February, to the strengthening of the financial system, must meet a minimum level of main capital, must have an additional excess by the amount resulting from the calculations provided for in annex II in relation to the assets referred to in paragraph 1.

4. without prejudice to the provisions of paragraph 1 of article 2, credit institutions and consolidated groups of credit institutions to which paragraphs 1 to 3 above, may apply must comply with provisions of them by December 31, 2012.

To do this, by March 31, 2012, will be presented to the Bank of Spain a plan which detailed the measures which they intend to adopt.
The submitted plan must be approved by the Bank of Spain within the period of 15 working days, and may include this modifications or additional measures necessary to ensure compliance with the provisions of the present Royal Decree-law.

5. the obligations laid down in this Royal Decree shall be considered standards of management and discipline, incurring the entities and individuals that fail to meet them sanctioned administrative liability pursuant to the provisions of title I of law 26/1988, of July 29, on discipline and intervention of the credit institutions.

6 failure to comply with the provisions of paragraphs 1 and 2 of this article 1 shall be considered serious or very serious violation in accordance with the letter h) of article 5 and the letter c) of article 4 of law 26/1988, of July 29, on discipline and intervention of the credit institutions.

7 failure to comply with the provisions of paragraph 3 of this article 1 shall be considered serious or very serious violation in accordance with the letter h) of article 5 and the letter c) of article 4 of law 26/1988, of July 29, on discipline and intervention of the credit institutions.

Article 2. Integration processes.

1 credit institutions that carry out integration processes during the year 2012 will have twelve months from the authorization of the operation of integration provided for in paragraph 4 below to comply with the requirements referred to in article 1.

2 may benefit from this scheme integration processes initiated as of September 1, 2011 provided they meet the following requirements: to) the integration of the entities participating in the operation shall generate a higher initial total balance on at least 20% to the total budget of the business in Spain for most of the participating entities. On the proposal of the Bank of Spain is may exempt this requirement in the final resolution, even if that figure is not reached according to the circumstances concurrent operations of similar dimension, unless in any case the increase could be less than 10% of the total balance sheet business in Spain for most of the participating entities.

(b) the integration process must be conducted through operations involving structural modifications in accordance with the regulations in force or operations of acquisition of entities which, at the date of entry into force of this Royal Decree, are owned mainly by the Fund for orderly bank restructuring. This regime shall not apply to the processes of integration which rest solely on contractual links, except in those processes involving only credit unions.

(c) participating entities shall take measures aimed at improving its corporate governance and must present a plan of remuneration of Directors and administrators. In general they will adapt to the provisions of the unified code of good governance of listed companies and, in particular, they must comply with the provisions of article 13 of the Royal Decree-Law 9/2009, of 26 June on bank restructuring and improvements of the own resources of credit institutions.

(d) the integration project will include a quantified target for increase of credit to families and small and medium-sized enterprises during the three following integration exercises.

(e) the project of integration should also include a plan of divestiture of assets related to real estate risks during the three following integration exercises.

(f) the resulting entity shall be viable from a financial perspective.

(g) meetings of shareholders or general assemblies of the entities that integrate must vote in favour of the integration agreement before September 30, 2012. In any case, integration should be concluded no later than January 1, 2013.

3. this regime shall not apply to the integration processes where the only participation of entities belonging to the same group of credit institutions.

4. the operation of integration must be authorised by the Minister of economy and competitiveness in within a month from the submission of the application for authorisation.

Such a request must be submitted to the General Directorate of the Treasury and financial policy by May 31, 2012. Meeting this deadline will not be required for operations acquisition of entities which, at the date of entry into force of this Royal Decree, are owned mainly by the Fund for orderly bank restructuring. (It will accompany the project certifying compliance with the requirements provided for in points (a) a) f) of paragraph 2.

The Bank of Spain and the National Commission of the market of stock, in the field of their respective competencies, will issue a report on compliance with these requirements, especially taking into account the feasibility of the resulting entity, and can obtain for this purpose all those reports deemed appropriate.

The granting of the authorization provided for in this section shall determine that does not require any further administrative authorization in the field of the management of credit and banking, including that to that referred to in the third subparagraph of article 10(1) of the Royal Decree-Law 9/2009, of 26 June, on bank restructuring and improvements of the own resources of credit institutions. In any case, will be enforceable those established by the legislation in the field of competition.

5. in the course of the procedure of authorization of the integration agreements advantageous framework or existing protocols or to be signed between the entities concerned, in particular, in those cases occurring attribution to any one of them of a degree of control above that corresponds to your participation in the resulting entity, can conditional authorization to the introduction of appropriate changes in them.

Title II modification of Royal Decree-Law 9/2009, of 26 June on bank restructuring and improvements of the own resources of credit article 3. Modification of the Royal Decree-Law 9/2009, of 26 June on bank restructuring and improvements of the own resources of credit institutions.

Royal Decree-Law 9/2009, of 26 June on bank restructuring and reinforcement of the resources of credit institutions is to be re-worded as follows: one. The second subparagraph of article 2(5) is drawn up in the following terms: «the outside resources obtained by the Fund for orderly bank restructuring, anyone who is its instrumentation mode, shall not exceed three times stile Endowment that exists at each time. However, the Minister of finance and public administration may authorize is exceeded this limit, unless, in any case, the outside financing from the Fund for orderly bank restructuring may lead to more than six times its endowment."

Two. Article 7.2. b) is drawn up in the following terms: «b) within a month since its designation, the Fund for orderly bank restructuring will prepare a detailed report on the equity situation and the viability of the institution and submit to the approval of the Bank of Spain a restructuring plan of the entity that allows the overcoming of the situation of difficulty in which is through its merger with one or more other entities of recognized» or the total or partial transfer of its business to one or more other entities through the sale of global or part of its assets and liabilities through procedures that ensure competition, as, among others, the auction system. At the reasoned request of the Fund for orderly bank restructuring, the Bank of Spain may extend the aforementioned period up to a maximum of six months. At the same time, the Fund for orderly bank restructuring rise to the Minister of finance and public administration and the Minister of economy and competitiveness an economic report that will detail the financial impact of the restructuring plan presented on funding charged to the general budget of the State. On the basis of the reports issued by the General Directorate of the Treasury and financial policy and the General intervention of the administration of the State, the Minister of finance and public administration may object, accordingly, in the period of five working days since the memory is high you.»

3. Article 9 is drawn up as follows: «article 9. Instruments for the reinforcement of the resources of credit institutions.

1. the Fund for orderly bank restructuring may purchase ordinary shares representing the share capital or contributions to the share capital of the entities, which, without incurring in the circumstances set out in article 6 of this Royal Decree-Law, need to strengthen their own resources and request.
2. the subscription of the securities referred to in the preceding paragraph will be conditioned to the elaboration by the requesting entity of a plan of recapitalization, with the content required in chapter II. This plan must be approved by the Bank of Spain, which must provide the information to the Ministry of economy and competitiveness through the General Directorate of the Treasury and financial policy.

The acquisition of shares representing the share capital by the Fund for orderly bank restructuring will require that excision remember the right of pre-emption of shareholders existing at the time of the adoption of the agreement for issuance, or renunciation by all of them that right.

3. with prior to the decision on the subscription of securities, the Fund for orderly bank restructuring will raise an economic report that will detail the financial impact of this acquisition on funding charged to the general budget of the State to the Minister of finance and public administration and the Minister of economy and competitiveness. On the basis of the reports issued by the General Directorate of the Treasury and financial policy and the General intervention of the administration of the State, the Minister of finance and public administration may object, accordingly, in the period of 5 working days since the memory is high you.

4. contributions committed by the Fund for orderly bank restructuring can be made in cash or by delivery of public debt securities or securities issued by the Fund itself. In addition, the Fund for orderly bank restructuring will satisfy contributions committed by offsetting of credits have his claim against the applicant entities.

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

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

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

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

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

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

8 in order ensure greater efficiency in the use of public resources the divestment by the Fund for orderly bank restructuring of securities made in exercise of the functions entrusted to it in this article held by its disposal through competitive procedures and within a period not exceeding three years from the date of your subscription. The Fund for orderly bank restructuring may take any of the measures provided for in paragraph 3 of article 7 to support the competitive process of disinvestment.

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

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

The provisions of this paragraph shall be without prejudice of compliance with the applicable legislation in terms of competition.

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

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

Four. Article 10 is worded as follows: «article 10. Integration of credit support measures.

1. the Fund for orderly bank restructuring can also buy bonds issued by credit institutions which, without incurring in the circumstances set out in article 6 of the present Royal Decree, will undertake a process of integration and need to reinforce its own resources.

For this purpose, the entities concerned shall draw up an integration plan that shall contain specific commitments for improvement of their efficiency, streamlining its administration and management, as well as downsizing of its productive capacity, and all this with the aim of improving their prospects.

The integration plan will require the approval of the Bank of Spain.

To decide on the adoption of any of these measures, the Fund for orderly bank restructuring should take into account the time and risk of the operation, the need to avoid competitive distortions and thus to facilitate the implementation and compliance of the integration plan approved by the Bank of Spain. In any case, the decision will be chaired by the principle of efficient use of public resources.

2. the securities referred to in paragraph 1 above shall be convertible instruments in shares or contributions to the share capital.

CAs must approve, at the time of the adoption of the agreement for issuance of anticipated titles in this article, the necessary agreements for capital increase or the subscription of capital in the amount of required contributions. The terms and conditions of the reward of the titles will be established taking into account the rules on State aid.

The acquisition of convertible securities from the Fund for orderly bank restructuring will require that excision remember the right of pre-emption of shareholders or cuotaparticipes existing at the time of the adoption of the agreement for issuance, or renunciation by all of them that right.
CAs should commit themselves to repurchase or redeem securities underwritten by the Fund for orderly bank restructuring as soon as they are able to do so in the terms involved in the integration plan. After five years from the disbursement without titles have been repurchased by the entity, the Fund for orderly bank restructuring may request its conversion in actions or social contributions of the issuer. The exercise of this right shall be, where appropriate, within a maximum period of six months from the expiration of the fifth year since the disbursement. However the above, issuance agreement should contemplate also convertibility of securities at the request of the Fund for orderly bank restructuring if, before the course of the period of five years, the Bank of Spain is very unlikely, in view of the situation of the institution or his group, which their repurchase or amortization can be performed within the time limit.

The conversion will take place under market conditions and in accordance with the economic value of the issuer of the securities at the time, to be determined pursuant to the provisions of article 9.5 of the present Royal Decree-law.

The securities issued under cover of the provisions of this rule will be Computable as basic resources and as principal, but it is obligatory to do so they are listed on an organized secondary market. For this purpose, they will not them apply the limitations established by law for the computation of own resources and of the principal.

The agreement of issuance of these securities must comply with the remaining conditions involved in the integration plan.

3. with previous character to the effective adoption of any of the measures provided for in this article, the Fund for orderly bank restructuring will raise an economic report that will detail its financial impact on funding charged to the general budget of the State to the Minister of finance and public administration and the Minister of economy and competitiveness. On the basis of the reports issued by the General Directorate of the Treasury and financial policy and the General intervention of the administration of the State, the Minister of finance and public administration may object, accordingly, in the period of five working days since the memory is high you.

4. the divestment by the Fund for orderly bank restructuring of titles you purchase under cover of the provisions of this article will be made through its repurchase of securities by the CA or its disposal to third parties. When the divestment of such securities or those resulting from the conversion is carried out through its sale to a third party, this should be conducted through competitive procedures and within a period not exceeding five years from the disbursement, which shall not apply in the case that the entity he may apply paragraph 8 of this article. The divestment of contributions to the share capital is not subject to any legal or statutory restrictions. The Fund for orderly bank restructuring may take any of the measures provided for in paragraph 3 of article 7 to support the competitive process of disinvestment.

5. to the conversion of the titles it will be application the provisions of paragraphs 6 and 9 of article 7.

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

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

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

Title III modification of Royal Decree-Law 11/2010, July 9, of governing bodies and other aspects of the legal regime of the boxes of savings article 4. Modification of the Royal Decree-Law 11/2010, July 9, of governing bodies and other aspects of the legal regime of the savings banks.

The Royal Decree-Law 11/2010, July 9, of governing bodies and other aspects of the legal regime of the savings banks, is amended in the following manner: one. Article 5 is worded as follows: «article 5. Indirect exercise of the financial activity of savings banks.

1 savings banks can develop its own object as credit institution through a bank that will provide all your financial business. They may also provide all or part of its non-financial assets attached to it.

2. the Bank through which the caja de ahorros pursuing his activity as a credit institution may use in its name and its activity expressions that identify its instrumental nature, including designations of caja de ahorros which depend on.

3 a savings that develop its activity as a credit institution through a bank in accordance with the provisions in this article will be of application the following specialties: to) the governing bodies of the box will be the General Assembly, the Board of Directors and, optionally, the Supervisory Board.

(b) the representation of the collective interests of the impositores, of the municipal corporations that had no founding box and workers entity status in its governing bodies will be established in the following manner: i. the representation of municipal corporations will take place on the basis of those in whose term has open office the Bank through which the caja de ahorros develop its financial activity.

II. representation of the groups impositores and workers will take place on the basis of the collective of the Bank through which the caja de ahorros develop its financial activity. The representation of employees in government bodies will also include employees of caja de ahorros.

The number of members of the governing bodies as well as the periodicity of its meetings shall be determined by the statutes of the Caja de Ahorros, according to the economic dimension and the activity of the entity.

4. without prejudice to the fulfilment of the provisions of the regulations of own resources, savings banks referred to in this article do not may allocate more than 10% of available surplus expenses other than those corresponding to his social work. However, the Bank of Spain may authorize the fate of percentages above necessary to meet essential entities operating expenses.

5. General meetings shall be ordinary or extraordinary.

Ordinary meetings shall be held once a year. Moreover, the extraordinary assemblies held so many times how many are expressly convened.

The general Assembly shall be convened by the Board of directors by notice published in the "Official Gazette of the register mercantile" and on the website of the box, with fifteen days at least in advance. The call will express the date, place and agenda, as well as the date and time of meeting on second call.

The statutes may establish, in replacement of the old system, the call is made by notice published on the website of the box, or by any means of communication, individual and written, that ensures the receipt of the notice by the General counsellors.

The general Assembly shall be quorate on first call when the General counsellors present and, where appropriate, the cuotaparticipes present or represented holding at least fifty percent of the voting rights. The Constitution second call will be valid either that is the number of attendees. The General counsellors may not be represented by another adviser or third party, whether physical or legal.
6 savings banks that develop their own object as credit institution through a bank in accordance with this article shall be exempted from the obligations contained in section 1 of chapter V of the law 44/2002 of 22 November, measures of reform of the financial system and its implementing regulations.

In addition, the Bank of Spain may adapt or exempt from compliance with organization in the area of internal control, audit and law 13/1985, of 25 may, collected risk management and prudential coefficients of investment, resources and requirements information obligations of financial intermediaries, and its implementing regulations, on an individual basis to savings boxes provided for in this article.

In any case the obligations referred to in the preceding paragraphs will be completed by the Bank through which savings banks exert their activity.

7. If a savings bank fails to hold the control under the terms of article 42 of the code of Commerce or reduced their participation so that it does not reach 25% of the voting rights of the credit institution to which refers to this provision, shall waive the authorization to act as a credit institution according to the provisions of the law of banking ordination on 31 December 1946 and proceed to your transformation in special Foundation pursuant to the provisions of the following article.

8 set out in this provision shall also apply to those savings banks that, in concert, exercise exclusive its object as credit institutions through a credit institution controlled jointly by all of them pursuant to article 8.3 of the Act 13/1985 of 25 May.

In particular, loss of control and reduction of joint participation below the limit referred to in the preceding paragraph will lead to loss of the condition of all the members of credit institutions and their transformation in special foundations.»

Two. Article 6 is worded as follows: «article 6. Transformation of savings in foundations of special character.

1 the savings banks may agree the segregation of activities financial and charitable by the regime laid down in this article in the following cases: a) as envisaged in paragraph 5 of the preceding article.

(b) as a consequence of the resignation to the authorization to act as a credit institution, and in other cases of revocation.

(c) as a result of the intervention of the credit institution in the cases provided for in law 26/1988, of July 29, on discipline and intervention of the credit institutions.

For this purpose they passed on all the heritage on its financial activity to another credit in Exchange for shares of the latter institution and will be transformed into a foundation of special character losing its status of credit institution.

In letters to)) and (c) of this paragraph will also apply to those savings banks that, in concert, exclusively exercise your object as credit through a credit institution controlled jointly by all of them. In such a case, the members boxes passed on all the heritage on its financial activity to another credit in Exchange for shares of the latter institution and will be transformed into foundations of special character losing its status of credit institution.

The Foundation focus their activity in the care and development of his work beneficial social, for which may carry out the management of its portfolio. The Foundation must allocate its charitable purpose product funds, shares and investments that integrate their heritage. Auxiliarmente, you can carry out the activity of promoting financial education.

2. together with the agreement of transformation, the General Assembly of the Fund, or boxes together, agree the Constitution of foundations special character, with approval of their statutes and designation of its Board of Trustees. Segregation of financial activity, for its part, shall be governed by the Spanish law 3/2009, of 3 April on structural modifications of commercial companies.

3 it is for the State supervision and control of the foundations of special character refers to which this Royal Decree-Law, whose main scope exceeds that of an autonomous region, through the protectorate that will be exercised by the Ministry of economy and competitiveness. In cases of segregation shall be considered scope of the Foundation's special character of the resulting Bank of segregation.

The foundations of special character referred to in the present Royal Decree-Law shall enjoy legal personality from the registration of the deed of their Constitution in the corresponding registry. In the case of State-level foundations, the registration shall be in the special register which is lodged in the Ministry of economy and competitiveness.

4. the foundations of special character will be governed by this Royal Decree-Law and its implementing regulations. Additionally, it shall apply the legislation on foundations.'

Title IV remuneration article 5. Pay at institutions that receive public financial support for its sanitation or restructuring.

1. administrators and managers of credit institutions participated mainly by the Fund for orderly bank restructuring shall not charge, during the financial year 2012, variable remuneration or discretionary pension benefits.

Without limiting the foregoing, entities provided for in this section conform conditions remuneration of its directors and management to those provided for in paragraph 3 of this article and the regulations issued in the same development.

2. the variable remuneration corresponding to the exercises in which subsists public financial support of the directors and management of credit that, without finding mostly part-owned by the Fund for orderly bank restructuring, have received financial support from the same, it will differ in three years, and will be conditioned to the results which, in relation to the fulfilment of the plan drawn up to obtain one justify their perception. The Bank of Spain will appreciate the concurrence of this circumstance in the exercise of the power to attributed the rule 105, paragraph 2.g of the Circular 3/2008 of 22 may, the Bank of Spain, to credit institutions, on the determination and control of minimum own resources, without prejudice to the application of the other criteria laid down therein.

Without limiting the foregoing, entities provided for in this section be adjusted remuneration conditions of its administrators and managers to the rules provided for in paragraph 3 of this article and the regulations issued in the same development.

3 entities requesting financial support from the Fund for orderly bank restructuring for its sanitation or restructuring, as necessary requirement to enjoy the same, be incorporated into contracts governing its relationship with its directors and management minimum content determined by the Minister of economy and competitiveness. The Ministerial order issued in use of this authorization will contain, among others, the following rules: a) limitations to the remuneration with reference of the applied to groups similar by the average of comparable entities by size and complexity. In any event, the limitations shall comply with the following maximum amounts: 1st payment, by all concepts, the members of the colleges of administration of entities owned mostly by the Fund for orderly bank restructuring, other than those referred to in the following numbers: 50,000 euros.

2nd remuneration for all concepts, of the members of the colleges of Administration other than those referred to in the following numbers of entities which, without finding mostly part-owned by the Fund for orderly bank restructuring, receive financial support from the same: 100,000 euros.

3rd remuneration fixed by all concepts of Executive Chairmen, CEOs and directors of entities owned mostly by the Fund for orderly bank restructuring: 300,000 euros.

4th remuneration fixed by all concepts of CEOs, directors Executive and managerial entities which, without finding mostly part-owned by the Fund for orderly bank restructuring, receive financial support from the same: 600,000 euros.

To the effect of the previous limits on computation, all remuneration received in the group to which belongs the credit institution shall be taken into account. Those same effects, fixed remuneration of Executive Directors and Presidents include diets that they receive for his membership to the Board of directors or bodies under the same.

(b) limitations to the variable remuneration, expressed in percentage terms on the fixed remuneration, with reference to the applied to groups similar by the average of comparable entities by size and complexity, with application of the rules laid down in paragraph 2 of this article.
4. the limitations of paragraphs 1, 2 and 3 may rise once produced the sanitation of the entity using the payment, amortization, rescue or alienation of securities underwritten by the Fund, or when otherwise understand to be reinstated to the same financial support.

5. This article and the rules which, in use of the rating provided for therein, approved by the Minister of economy and competitiveness, must also apply, in the part corresponding to the remuneration conditions of the members of the administrative bodies of the entities to that referred to in paragraphs 1 to 3 and whose relationship with the entity does not regulate in any contract.

6 where entities refer to paragraphs 1, 2 and 3 to participate in a process of integration of those provided for in article 2 of this Royal Decree, limitations to the remuneration referred to in those paragraphs shall apply to the directors and management that are of one of the entities that require public financial support or give origin to the same , and that for the purposes of this section shall identify themselves as such in its integration plan. Also, the Minister of economy and competitiveness, in view of the remuneration plan submitted in the framework of the process of integration that is regulated in article 2 of the Royal Decree-Law and the economic and financial situation of the entities participating in the same, may modify the criteria and limits laid down in paragraphs 2 and 3 of this article.

7. for the purposes of this article, refers to directors the Directors-General as well as the members of senior management, in accordance with the definition contained in article 1 of the Royal Decree 1382 / 1985, of 1 August, which regulates the employment relationship of the special character of the senior management staff.

8. the failure by the entities of the provisions contained in this article will be constitutive of serious infringement, incurring the same administrative responsibility punishable pursuant to the provisions of title I of law 26/1988, of July 29, on discipline and intervention of the credit institutions.

First additional provision. Exceptional treatment of the preferred shares and other instruments in circulation.

Credit institutions which have outstanding preferred shares or mandatory convertible debt instruments in shares issued before the entry into force of this Royal Decree-law may include in the plan of implementation referred to in article 1, the request to defer the payment of the remuneration provided for a period not exceeding twelve months while as a result of sanitation which have had to be made according to the provisions of this Royal Decree, without benefits or sufficient distributable reserves or there is a deficit of own resources in the credit institution issuing or dominant.

Thus only deferred compensation payment may be made, after the period of deferral if benefits or sufficient distributable reserves are available and there is a deficit of own resources in the credit institution issuing or dominant.

Second additional provision. Regime applicable to members of an institutional system of protection savings banks.

In case of contribution of the ownership of all assets and liabilities to the respective banking business to the central entity of an institutional system of protection it shall be deemed that the regime of indirect exercise provided for in Royal Decree-Law 11/2010 of 9 July, governing bodies and other aspects of the legal regime of the savings banks will apply to member savings banks.

Third additional provision. Application of the regime provided for in law 26/2006, of July 17, mediation of insurance and private reinsurance, participating companies in integration processes.

Participating companies in integration processes as provided for in article 2 of this Royal Decree, will them apply the provisions contained in article 25, paragraph 1, in relation to the availability of the distribution network of the credit and the fragmentation of the same entities, and in article 25 above, paragraph 4, both from law 26/2006, of July 17, mediation of insurance and private reinsurance, from 1 January 2014.

Fourth additional provision. Increase in the endowment of the Fund for restructuring ranked Bank 1. The endowment of the Fund for orderly bank restructuring is increased by 6,000 million euros charged to the general budget of the State.

2. the references to the Minister of economy and Finance contained in Royal Decree 9/2009, of 26 June on bank restructuring and reinforcement of the resources of credit institutions, shall be deemed performed to the Minister of economy and competitiveness, except those included in articles 2.5, 7.2, 9.3 and 10.3 of the aforementioned Royal Decree-law.

Fifth additional provision. Computation of losses in the event of compulsory reduction of share capital in the company and dissolution in the joint-stock companies and limited liability.

It is renewed, without solution of continuity and for all legal purposes, during the fiscal year to be closed after the entry into force of the present Royal Decree-Law, the application of the provisions of paragraph 1 of the sole additional provision of the Royal Decree-Law 10/2008 of 12 December.

Sole repeal provision. Repeal legislation.

How many rules of equal or lower rank to oppose provisions of the present Royal Decree-law are repealed.

First final provision. Modification of the law 31/1985, 2 of August, of regulation of the basic rules on governing bodies of the savings banks.

Article 1.Uno of the law 31/1985, 2 of August, of regulation of the basic rules on governing bodies of the savings banks, is worded as follows: 'one. Administration, management, representation and savings banks control corresponds to the following governing bodies: a) General Assembly.

b) Board of Directors.

(c) Control Commission.

In addition, are organs of savings banks CEO and investment committees, remuneration and appointments and Social charity work.'

Second final provision. Modification of the law 13/1994 of 1 June, autonomy of the Bank of Spain.

The sixth additional provision of law 13/1994 of 1 June, autonomy of the Bank of Spain, is worded as follows: ' 1. for the purposes of this provision refers to guarantee any garment, simultaneous operation, purchase Pact of repurchase, condition, right of retention, deposit, transfer, or any other legal business with purpose of guarantee» that it falls on any asset realizable or susceptible of appropriation, including the money in cash, and that it is intended to ensure the rights and obligations arising from any present or future operation concluded with the Bank of Spain, the European Central Bank or other national central bank of the European Union.

2 a hereto you will apply the following legal regime: to) its Constitution will not require, for its full validity, effectiveness to the guarantor or third parties, enforceability, even for the purposes of articles 517 and 571 et seq. of the law on civil procedure, or admissibility as evidence, the intervention of a notary nor the fulfilment of any other formal requirement other of by one side, consistency in writing or legally equivalent form of the security agreement or, where applicable, unilateral manifestation of the guarantor, and, on the other hand, of the contribution of the active object of the guarantee and the record in writing or in a legally equivalent manner of this contribution.

For the purposes of this additional provision, registration or endorsement by electronic means and any durable medium shall be considered legally equivalent to the certificate form in writing.

The formalization of the corresponding principal obligation will not require for its full validity, effectiveness to the guarantor or third parties, enforceability, even for the purposes of articles 517 and 571 et seq. of the law on civil procedure, or admissibility as evidence, the intervention of a notary nor the fulfilment of any other formal requirement.

(b) for operations in which the last of the guarantee beneficiary is the Bank of Spain, the European Central Bank or other national central bank of the European Union, either directly or through the intermediary of a third party, when the assets object of the guarantee securities or financial instruments represented through book-entry, your input and record in writing or in a form legally equivalent of this contribution may be implemented using one of the following procedures : 1 either through transfer accounting, with displacement of the property, of the securities or financial instruments to the account of the beneficiary or a third party acting directly or indirectly on behalf or for the account of the beneficiary, according to article 9 of law 24/1988, of 28 July, the stock market, losing the guarantor in favour of the beneficiary or third party financial instrument or the value property.
2. by means of the annotation of the guarantee into account according to article 10 of law 24/1988, of 28 July, the stock market, keeping the guarantor property value or financial instrument.

3rd well by accounting transfer or annotation of the securities or financial instruments, without movement of the property, in an account in the name of the beneficiary or a third party acting directly or indirectly on behalf or for the account of the beneficiary. That account will only aim to receive the pledges made on securities and instruments represented by annotations annotations into account keeping the guarantor the same property.

In the event that the object of the guarantee is an account of securities or financial instruments, their contribution and the record in writing or in a form legally equivalent of this contribution action using the annotation of the warranty on the corresponding account, being applicable to such turn mutatis mutandis as provided for in the last subparagraph of paragraph e) following.

(c) in the event that the assets covered by the warranty are represented by physical titles, values your input and record in writing or in a form legally equivalent of this contribution may be implemented by means of its delivery to the beneficiary of the guarantee or a third party established by common agreement between the parties.

(d) to run just the certificate issued by the Bank of Spain, the European Central Bank or the national central bank of the European Union corresponding, supporting the amount of liquid, due and payable amounts running, along with the order of alienation, appropriation or payment of the assets constituting the warranty-free transfer , as appropriate in accordance with the provisions of this paragraph. In this certification you must be noted that the liquidation has been practised in accordance with the agreement, Pact and/or rule that derives the obligation concerned.

At the option of the payee, and subject to the terms of the security agreement, the implementation may carry out through any of the procedures recognized by the law in force.

Where the object of the guarantee consists of assets traded on an organized market, its disposal will be done through the corresponding governing body. Notwithstanding any other alienation procedures recognized by the law in force, otherwise alienation may be conducted also using auction organized by the Bank of Spain.

Also, in those cases in which the creation of the security had not has implemented already by the transmission of ownership of related assets, the will also be implemented through the appropriation by the Bank of Spain, the European Central Bank or the national central bank of the European Union corresponding assets on which was the guarantee and compensation of its value or application of its value to the fulfilment of the obligations guaranteed, provided: (i) it had been agreed between the entity that brings the assets of warranty and the Bank of Spain, the European Central Bank or the national central bank of the European Union corresponding and (ii) it had been planned between the parties the modalities of assessment of the assets of warranty.

In any case, the excess debt is satisfied once refunded to the institution which has provided guarantee assets.

(e) when the object of the guarantee consists of garment on money deposits, the beneficiary or, where appropriate, the depositary entity of the cash must score in the corresponding account the Constitution of the garment on the account or, where applicable, on the pledged amount, once you have evidence of the consent of the holder of that account.

Its Constitution will not require, for its full validity, effectiveness to the guarantor or against third parties, enforceability, or admissibility as evidence, the intervention of a notary or compliance with any other formal requirement other than annotation refers to which the previous paragraph, which will be equivalent to the contribution of the active object of the guarantee and the record in writing or in a form legally equivalent of this contribution.

Such pledge will run for compensation, leaving funds surplus, if any, satisfied once the debt available to the account holder.

Annotation referred to in the first subparagraph of this paragraph, the quantities entered in the account whose balance is pledged or, where appropriate, only the pledged amount will be for the sake of your income affects irrevocably and without limitation to the full compliance of the guaranteed obligations. Equally, and unless the parties have agreed otherwise, from the time of the entry of the garment, the account holder not may withdraw funds deposited therein or, where appropriate, the amount pledged without the prior consent of the beneficiary of the guarantee.

(f) assets that materialize warranties apply to the liquidation of obligations guaranteed even in case of opening of insolvency proceedings or administrative liquidation. Such guarantees may be run separately, immediately, in accordance with what has been agreed between the parties and with the provisions of this additional provision.

The guarantees will not be limited, restricted or affected in any way by the competition or the administrative liquidation of the other party.

In particular, the Constitution, acceptance or enforcement of the security referred to in this additional provision, the balance of the accounts or records that materialize and the formalization of the guaranteed obligations will not be contested in the case of reintegration actions linked to an insolvency procedure or administrative liquidation.

((g) the date of creation of the security, as well as balance and date appearing on the certificate issued by the Bank of Spain, the European Central Bank or the other central banks of the European Union to that referred to in paragraph (b)), will be proof against the institution itself and third parties.

The guarantees constituted in accordance with the rules of this additional provision will not be susceptible of however, locking, assessment or of any other restriction or retention of any nature that is both legal and conventional, since the time of its establishment.

3. the parties may agree to, in the case of variations in the value of the assets object of the guarantee or the amount of the secured obligation, be presented new assets, including cash, or, where appropriate, and when it is so agreed, returned to restore the balance between the value of the secured obligation and the value of the guarantees constituted to secure. In this case, such assets shall be regarded as an integral part of the initial guarantee and will be treated as if they had been provided simultaneously to the contribution of the initial object of financial security, being them implementing all provisions of this provision.

4. the Constitution of guarantees on loans or mortgages in favour of the Bank of Spain, the European Central Bank or other national central banks of the European Union, to ensure the fulfilment of present or future obligations facing them on transactions concluded in the exercise of their functions shall be governed, in addition to as provided in paragraph one (((((, in paragraphs to), d), f) and g) paragraph two and the following sections of this provision, by the following rules: to) loans and credits will be susceptible of hypothecation or assignment that the formal requirements or materials that the parties had agreed in the regard of your assignment or encumbrance. The supply of information or documentation relating to loans or credits or credit rights derived from them, including the one associated with the corresponding debtors and, where appropriate, guarantor, to the Bank of Spain, the European Central Bank or the central banks of the European Union, as well as, where appropriate, to those third parties that they could transfer their rights in case of transfer of the credit or enforcement of the security rights on them, it does not imply any breach of secrecy or data protection regulations.

The pledge or assignment shall cover only, unless otherwise agreed, credit rights arising from the contract. In any case the assignee or beneficiary of the warranty assumes the obligation to make funds available to borrowers. The pledge or assignment made in accordance with the provisions of this paragraph in any case will mean breach of loans or credits and will not require the consent of the debtor or guarantor of loans pledged or transferred.
(b) the contribution and the record in writing or in a form legally equivalent of the provision of credit rights may be implemented by delivering to the beneficiary models approved for this purpose by the latter or by means of written communication or form legally equivalent to the recipient of the data of the claims in the form established for this purpose by the , without requiring compliance with any other formal requirement for the full validity of the pledge or assignment, or its effectiveness against the debtor and, where applicable, the guarantor, or front to any third party, nor for its enforceability or admissibility as evidence.

(c) the fruits of loans or credits assigned or pledged includes, unless otherwise agreed, the credit institution that provides the warranty.

(d) in the case of default of the secured obligation, the beneficiary of the guarantee will acquire full ownership of the credit rights. However, and without prejudice to any other implementation procedures recognized in the existing legal order, may also run the security by auction organized by the Bank of Spain.

(e) the debtor or, where appropriate, guarantor of a right of credit that has been loaned or pledged in favour of the Bank of Spain, the European Central Bank or the central banks of the European Union not may raise against these, nor against those third parties who could subsequently transmit of the corresponding right to credit , none of the exceptions that would have corresponded him against credit grantor or pignorante, not even the compensation institution.

5. in contracts concluded in the exercise of its functions, the Bank of Spain may agree on resolution or extinction even in cases of insolvency situations or administrative liquidation. Also, in such cases of competition or administrative liquidation, operations guaranteed pursuant to the provisions of this additional provision shall be regarded as credits of public law for the purposes of the application of article 91.4 of law 22/2003 of 9 July, bankruptcy, in the part which can not be satisfied with charge constituted guarantees.

6. in matters not provided for expressly in this additional provision, shall apply Additionally the regime that, with respect to financial guarantees, establishes chapter II of the Royal Decree-Law 5/2005, 11 March, urgent reforms to boost productivity and for the improvement of public procurement.

7. by law it can develop set out in this provision.»

Third final provision. Modification of the Royal Decree-Law 2/2011 February 18, for the strengthening of the financial system.

(2) of the third transitional provision of the Royal Decree-Law 2/2011, February 18, to strengthen the financial system, is to be re-worded as follows: «2. debt instruments issued subsequent to the entry into force of the present Royal Decree, with clauses under which are convertible into ordinary shares, will integrate the principal laid down in article 2 of this Royal Decree-Law provided that they fulfil the following conditions» (: to) provide for its mandatory conversion at the latest 31 December 2018, or before that date, in the case of sanitation or restructuring of the company or its group;

(b) that the nominal and maximum number limit actions to deliver in the conversion to be determined at the time of the issuance of debt instruments;

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

(d) provide for its mandatory conversion when it is fails to meet the minimum equity ratio; (and e) marketing is carried out in accordance with the criteria established the National Commission of the stock market to ensure the adequate protection of investors and, in particular, the effectiveness of the conversion ratio proposed investors. In addition, in the event that a part of the broadcast is marketed among the retail clientele, will require the application for admission to trading, both the debt instrument and the title of capital, in an official secondary market.

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

Fourth final provision. Modification of the Royal Decree-Law 16, 2011, on 14 October, whereby the deposit guarantee fund of credit is created.

Royal Decree-Law 16, 2011, on 14 October, by which creates credit deposit guarantee fund, is amended in the following manner: one. The letter b) of paragraph 2 of article 6 is worded as follows: 'b) the spill making the background between the entities attached to it, distributed according to the basis of calculation of the contributions, which will be recorded as a heritage once be agreed.'

Two. The second paragraph of article 7.5 is worded as follows: «However, most two-thirds to agree on the realization of those levies that establish the obligation to make payments in addition to the ordinary annual contributions or that advance payment of the latter, as well as the measures referred to in the framework of the action plans referred to in article 11 is required.»

Fifth final provision. Competence titles.

The present Royal Decree-Law dictates the amparo rules pursuant 6th, 11th, and 13th in article 149.1 of the Spanish Constitution, which attribute to the State competition on commercial law, bases of management of credit, banking and insurance and bases and coordination of the general planning of economic activity, respectively.

Sixth final provision. Faculty of development.

The Government may issue the necessary regulations for the development of the provisions of this Royal Decree.

It empowers the Minister of economy and competitiveness to modify provisions of annexes I and II.

The Bank of Spain will approve amendments that are relevant to accommodate the provisions of Circular 4/2004 to the present Royal Decree-law. As of December 31, 2012 the Bank of Spain may modify the coverage provided for in annex I in accordance with article 48.1 of law 26/1988, of July 29, discipline and intervention of the credit institutions.

Seventh final disposition. Entry into force.

The present Royal Decree-Law shall enter into force the day of its publication in the «Official Gazette».

Given in Madrid on February 3, 2012.

JUAN CARLOS R.

The President of the Government, MARIANO RAJOY BREY annex I 1. Real estate assets received in payment of debts for credit institutions and that they have an antiquity in balance sheet exceeding 36 months will have a percentage of at least 40% coverage.

2 coverages that correspond by qualified as dubious operations aimed at the financing of construction or real estate developments of all kinds of assets, which are finished, in no case may be less than 25% of the amount of live risk.

3 coverage that apply for qualified as substandard operations aimed at the financing of construction or real estate developments of all kinds of assets, which are finished, in no case may be less than 20% of the amount of live risk. This percentage is 24% for those operations that do not have collateral.

4 coverage corresponding operations qualified as dubious or substandard, aimed at financing of land for real estate development or construction or real estate developments of all kinds of assets, which are ongoing, in no case may be less than the percentages listed below: doubtful - percentage substandard - asset class funding percentage of land for real estate development 60 60 financing of construction or real estate development underway with work stop 50 50






Financing of construction or real estate development underway with work underway 50 24 5. The minimum percentages of coverage relating to real estate assets received in payment of debts may not be less than the following: a) received assets consisting of construction or completed real estate developments, as well as privately owned homes that are not habitual residence of borrowers the percentage of deterioration minimum applicable to assets adjudicated in payment of debts shall be 25% , and the minimum percentages of coverage according to the seniority of their inclusion in the balance sheet will be those included in the following table: period from the procurement percentage of coverage more than 12 months not exceeding 24 30 more than 24 months but not exceeding 36 40 more than 36 months 50
(b) received assets consist of land for real estate development or construction or real estate developments in progress, regardless of the seniority of their inclusion in the balance sheet.




Asset class percentage cover land for real estate development 60 construction or real estate development underway 50 annex II the excess additional main capital referred to in paragraph 4 of article 1 of the present Royal Decree-Law shall be equivalent to the sum of the amounts resulting from the calculations listed below are designated. These amounts will be deducted the provisions made by those assets.

a) assets classified as doubtful and substandard in accordance with annex IX to Circular 4/2004 of 22 December, to credit institutions, public and reserved financial reporting standards, and models of financial statements: asset class percentage on amount of live risk financing of land 80-financing promotions in course (except substandard work underway).





65 b) assets received in payment of debt: asset class percentage over book value floor 80 promotions underway 65

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