Circular 5/2017, of December 22, amending Circular 5/2012 on banking transparency and lending responsibility

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Circular 5/2017, of December 22, amending Circular 5/2012, of June 27, to credit institutions and payment service providers, on transparency of banking services and responsibility in the granting of loans (BOE of January 3, 2018)

In the Spanish legal order, Order EHA/2899/2011, of October 28, on transparency and protection of banking service clients, establishes in its Article 27 the official interest rates that will be published monthly for the purpose of their application by credit institutions under the terms provided for in the Order, as a reference in variable rate mortgage loans. In particular, letter d) of said Article collects the "One-year interbank reference (Euribor)"; and paragraph 3 of this same Article delegates to the Bank of Spain the development by Circular of the determination of the method of calculation of the official rates collected in the regulation.

In exercise of said delegation, Circular 5/2012, of June 27, of the Bank of Spain, to credit institutions and payment service providers, on transparency of banking services and responsibility in the granting of loans, which is now modified, establishes in paragraph 4 of its Annex 8 the method of calculation of the one-year interbank reference (Euribor) and, in paragraph 6 of the same Annex, the definition and calculation formula of the one-year interbank rate (also known as the one-year Mibor rate).

In recent times, several changes have occurred that require a punctual and eminently formal modification of said Annex 8, paragraphs 4 and 6, of Circular 5/2012, as its wording has become obsolete by referring to the administrator of Euribor as the European Banking Federation (despite its name having changed), and not also contemplating the recent consideration of Euribor as a "critical index."

In this sense, on the one hand, on June 20, 2014, the administrator of Euribor® changed its name to EMMI (European Money Markets Institute). This modification was intended to highlight the operational independence of EMMI with respect to the European Banking Federation.

On the other hand, Commission Implementing Regulation (EU) 2016/1368 of August 11, 2016, establishing a list of critical reference indices used in financial markets, in accordance with Regulation (EU) 2016/1011 of the European Parliament and of the Council, declared the reference index listed in its annex (Euro interbank offered rate (Euribor®), which measures unsecured interbank offered interest rates in the euro area, and administered by the European Money Markets Institute (EMMI), Brussels, Belgium) as a "critical reference index."

Consequently, in the exercise of the powers conferred upon it, the Governing Council of the Bank of Spain, upon proposal of the Executive Commission and in agreement with the Council of State, has approved this Circular, which contains the following rules:

First Rule.

Modifications of paragraphs 4 and 6 of Annex 8 of Circular 5/2012, of June 27. [1]

1. Paragraph 4 of Annex 8 of Circular 5/2012, of June 27, of the Bank of Spain, to credit institutions and payment service providers, on transparency of banking services and responsibility in the granting of loans, shall read as follows:

"4. One-year interbank reference (Euribor).

It is defined as the simple monthly arithmetic mean of the daily values of the Euribor® reference index listed in the Annex of Commission Implementing Regulation (EU) 2016/1368 of August 11, 2016, establishing a list of critical reference indices used in financial markets, in accordance with Regulation (EU) 2016/1011 of the European Parliament and of the Council. The index refers to Euribor® at a twelve-month term."

2. The first paragraph of paragraph 6 of Annex 8 of Circular 5/2012, of June 27, of the Bank of Spain, to credit institutions and payment service providers, on transparency of banking services and responsibility in the granting of loans, shall read as follows:

"6. The one-year interbank rate (also known as the one-year Mibor rate).

It is defined as the simple mean of the daily interest rates at which one-year term transactions have been executed in the interbank deposit market, during the business days of the corresponding natural month. However, on business days on which no one-year transactions have been executed in the Spanish interbank deposit market, the Euribor® reference index listed in the Annex of Commission Implementing Regulation (EU) 2016/1368 of August 11, 2016, establishing a list of critical reference indices used in financial markets, in accordance with Regulation (EU) 2016/1011 of the European Parliament and of the Council, shall be taken as the data to calculate the monthly mean."

[1]

Texts incorporated into Circular 5/2012, of June 27.

Sole Final Provision. Entry into force.

This Circular shall enter into force the day following its publication in the "Official State Gazette" (Boletín Oficial del Estado).

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