Royal Decree-Law 10/2012 of 23 March, amending certain financial rules regarding the powers of the European Supervisory Authorities (Correction of Errors)

OFFICIAL STATE BULLETIN No. 72 Saturday, March 24, 2012 Sec. I. Page 25483 I. GENERAL PROVISIONS HEAD OF STATE 4091 Royal Decree-Law 10/2012, of March 23, amending certain financial rules in relation to the powers of the European Supervisory Authorities. (Correction of Errors)

I The timely transposition of Community directives, particularly those concerning the internal market, currently constitutes one of the priority objectives established by the European Council. The European Commission submits periodic reports to the Competitiveness Council, which are given high political value as they serve to measure the effectiveness and credibility of Member States in implementing the internal market.

The fulfillment of this objective is even more urgent today given the new scenario designed by the Treaty of Lisbon, which amends the Treaty on European Union and the Treaty establishing the European Community, regarding failures to transpose obligations on time. For such failures, the Commission may request the Court of Justice of the European Union to impose significant economic sanctions in an accelerated manner (Article 260.3 of the Treaty on the Functioning of the European Union – TFEU).

Spain has consistently fulfilled the transposition deadlines committed to since their inception; however, at present, it presents a delay in transposing the directive incorporated by this Royal Decree-Law, placing it at risk of fines under Article 260.3 of the TFEU.

Therefore, given the gravity of the consequences of continuing to accumulate delays in the processing of this norm, it is necessary to approve it via Royal Decree-Law, which will allow closing the infringement procedure opened and thereby avoid the imposition of economic sanctions on Spain.

Regarding the use of the Royal Decree-Law as a transposition instrument, it should be noted that the Constitutional Court, in Judgment 23/1993, of January 21, states that the decree-law is a constitutionally lawful instrument to address problematic economic situations, and in its Judgment 1/2012, of January 13, it validates the concurrence of the enabling budget of extraordinary and urgent need under Article 86.1 of the Constitution when there is "patent delay in transposition" and the existence of "infringement procedures against the Kingdom of Spain."

Furthermore, this is not the first time this legal instrument has been resorted to in order to avoid the certain and imminent risk of imposing economic sanctions for failure to comply with European Union Law. Thus, the issuance of Royal Decree-Law 8/2007 of September 14, amending certain articles of Law 23/1992, of July 30, on Private Security, was justified by the "existence of an enabling budget, referred to by the jurisprudence of the Constitutional Court, in which the necessity of origin of the norm must be of such nature that it cannot be addressed through the urgent legislative procedure, due to the requirement of its immediacy." This enabling condition also exists in the current case.

II This Royal Decree-Law introduces the legislative modifications required by the transposition of Directive 2010/78/EU of the European Parliament and of the Council, of November 24, 2010, amending Directives 98/26/EC, 2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC and 2009/65/EC in relation to the powers of the European Supervisory Authority (European Banking Authority), the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority).

In November 2008, the Commission tasked a high-level expert group chaired by Jacques de Larosière with drawing up a series of recommendations on how to strengthen supervision measures to improve citizen protection and restore confidence in the financial system. In its final report presented on February 25, 2009 ("the de Larosière Report"), the high-level expert group recommended strengthening the supervision framework to reduce the risk and severity of future financial crises.

Following this report, the European Council, in the conclusions following its meeting of June 18 and 19, 2009, recommended the creation of a European System of Financial Supervisors composed of three new European Supervisory Authorities, which led to the approval of Regulation (EU) No 1093/2010 of the European Parliament and of the Council, of November 24, 2010, establishing the European Banking Authority; Regulation (EU) No 1094/2010 of the European Parliament and of the Council, of November 24, 2010, establishing the European Insurance and Occupational Pensions Authority; and Regulation (EU) No 1095/2010 of the European Parliament and of the Council, of November 24, 2010, establishing the European Securities and Markets Authority.

The modification of the institutional supervision architecture established within the European Union required adapting existing Community legislation to the new architecture and the new procedures derived from the new supervision scheme, which occurred through the approval of the aforementioned Directive 2010/78/EU.

Directive 2010/78/EU introduced modifications to sectoral directives in order to integrate the newly created authorities into the European framework of cooperation between supervisors, and to allow these authorities to perform the functions established in their respective regulations.

Taking the above into account, and in parallel with the modifications made within the European Union, this Royal Decree-Law incorporates into national law the modifications introduced by Directive 2010/78/EU, with the exception of rules related to money laundering, which will be subject to transposition in a regulatory norm; and those related to collective investment institutions, which are subject to transposition through Law 31/2011, of October 4, amending Law 35/2003, of November 4, on Collective Investment Institutions and its development regulations.

To carry out this transposition, the Royal Decree-Law contains provisions whose content focuses on the following elements: First, the obligation to cooperate with the European Banking Authority, the European Securities and Markets Authority, and the European Systemic Risk Board. Second, communication to the European Banking Authority and the European Securities and Markets Authority of various aspects related to the supervision of the solvency of financial entities. Third, the introduction of the binding mediation mechanism of the European Banking Authority and the European Securities and Markets Authority in case of conflicts between supervisors of different Member States. Fourth, the obligation to consult the European Banking Authority. Fifth, information to the European Insurance and Occupational Pensions Authority on certain aspects related to the activity and supervision of employment pension funds.

Taking these premises into account, this Royal Decree-Law is integrated by seven articles, each of which introduces modifications, along the lines indicated above, to the following laws: Law 13/1985, of May 25, on investment coefficients, own funds and information obligations of financial intermediaries; Legislative Royal Decree 1298/1986, of June 28, on Adaptation of Current Law in Matters of Credit Institutions to that of the European Communities; Law 24/1988, of July 28, on the Securities Market; Law 26/1988, of July 29, on Discipline and Intervention of Credit Institutions; Law 41/1999, of November 12, on payment systems and securities settlement; Legislative Royal Decree 1/2002, of November 29, approving the consolidated text of the Law on the Regulation of Pension Plans and Funds; Law 5/2005, of April 22, on the supervision of financial conglomerates and amending other laws of the financial sector.

The measures contemplated in this Royal Decree-Law aim to adapt the national supervision scheme to the obligations derived from European Union law that establish a new European supervision framework equipped with those instruments considered essential to avoid the reproduction of financial practices that were at the origin of the economic crisis. This adaptation must be carried out with the utmost speed, as only in this way will the European supervision scheme have effective implementation in our country in coordination with the rest of the Member States, as European regulations require.

III The serious economic crisis situation has generated a sharp fall in economic activity and a corresponding sharp drop in revenue collection by territorial administrations. This is causing accumulated delays in the payment of obligations contracted with their suppliers, with the consequent negative impact on the liquidity of companies and the destruction of employment. This situation is aggravated by the stringent restrictions on access to credit and the banking discount of those pending payments.

With the aim of providing solutions to this serious situation, the Government approved Royal Decree-Law 7/2012, of March 9, creating the Fund for the financing of payments to suppliers, which complements what is provided in Royal Decree-Law 4/2012, of February 24, determining information obligations and procedures necessary to establish a financing mechanism for payments to suppliers of local entities. For its correct application and to dispel uncertainties, a modification of some aspects of Royal Decree-Law 7/2012, of March 9, creating the Fund for the financing of payments to suppliers, is included, with the objective of facilitating its urgent and immediate application with greater legal certainty.

In virtue thereof, making use of the authorization contained in Article 86 of the Spanish Constitution, upon proposal of the Minister of Economy and Competitiveness, and after deliberation by the Council of Ministers in its meeting on March 23, 2012,

I HEREBY ORDER:

Article 1. Modification of Law 13/1985, of May 25, on investment coefficients, own funds and information obligations of financial intermediaries.

Law 13/1985, of May 25, on investment coefficients, own funds and information obligations of financial intermediaries, is modified as follows:

One. Letter d) of paragraph 2 of Article 10bis is drafted as follows:

"d) Cooperate closely with other competent authorities with supervisory responsibility over foreign credit institutions, parent companies, subsidiaries or participations of the same group under the terms provided in Article 6 of Legislative Royal Decree 1298/1986, of June 28.

In particular, the Bank of Spain will cooperate with the aforementioned competent authorities in granting authorization for the use of internal credit ratings or internal methods for measuring operational risk to be applied in Spanish groups of credit institutions and in determining the conditions to which such authorization must be subject, if any.

The authorization requests mentioned in the previous paragraph, submitted by a credit institution parent company of the European Union and its subsidiaries, or jointly by the subsidiaries of a parent financial holding company of the European Union, shall be addressed to the Bank of Spain, in its capacity as the authority responsible for exercising supervision of consolidatable groups of credit institutions.

In these cases, within a period not exceeding six months, the Bank of Spain will promote the adoption of a joint decision on the request with the other competent authorities of other Member States responsible for the supervision of the various entities integrated into the group. The reasoned resolution recording this joint decision will be notified to the applicant by the Bank of Spain.

The period referred to in the previous paragraph shall begin on the date of receipt of the complete application by the Bank of Spain. The Bank of Spain will forward said application without delay to the other competent authorities.

In the absence of a joint decision between the Bank of Spain and the other competent authorities within the six-month period, the Bank of Spain will resolve on the request. The reasoned resolution will take into account the opinions and reservations of the other competent authorities expressed during the six-month period. The reasoned resolution will be notified to the applicant and to the other competent authorities by the Bank of Spain.

If at the end of the six-month period any of the competent authorities involved has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council, of November 24, 2010, establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC, the Bank of Spain will postpone its resolution and wait for the decision that the European Banking Authority may adopt in accordance with Article 19, paragraph 3, of said Regulation. Subsequently, it will resolve in accordance with the decision of the European Banking Authority. The six-month period will be considered the conciliation period within the meaning of Article 19 of the aforementioned Regulation.

In the case of the equivalent procedure governing, as provided in Directive 2006/48/EC of the European Parliament and of the Council, of June 14, 2006, on the taking up and pursuit of the business of credit institutions, the aforementioned authorizations when they concern groups of foreign credit institutions in which a Spanish credit institution is integrated, the Bank of Spain, in addition to cooperating in the joint decision to be adopted, may accept, if appropriate, the decisions adopted by the competent authorities of other Member States of the European Union when they are responsible for exercising supervision of those groups. The affected Spanish entity will calculate its own fund requirements in accordance with said decision.

Regulatory provisions may specify the terms of the cooperation procedure referred to in this letter."

Two. Letter e) of paragraph 2 of Article 10bis is drafted as follows:

"e) Sign coordination and cooperation agreements with other competent authorities aimed at facilitating and establishing effective supervision of the groups entrusted to their supervision and assuming the additional tasks resulting from such agreements.

In particular, the Bank of Spain may sign a bilateral agreement in accordance with Article 28 of Regulation (EU) No 1093/2010, to delegate its supervisory responsibility for a subsidiary entity to the competent authorities that have authorized and supervise the parent company, in order for them to monitor the subsidiary in accordance with the provisions provided in this law and its development regulations. The Bank of Spain must inform the European Banking Authority of the existence and content of such agreements."

Three. Letter f) of paragraph 2 of Article 10bis is drafted as follows:

"f) Notify, as soon as possible, the holder of the Ministry of Economy and Competitiveness, the remaining national or foreign supervisory authorities affected, the European Banking Authority, and the European Systemic Risk Board, of the emergence of an emergency situation, including a situation as defined in Article 18 of Regulation (EU) No 1093/2010 and, in particular, in those cases where there is an adverse evolution of financial markets that may compromise liquidity in the market and the stability of the financial system of any Member State of the European Union in which entities of a group subject to supervision on a consolidated basis by the Bank of Spain have been authorized or in which significant branches of a Spanish credit institution are established, as contemplated in the following letter g)."

Four. Paragraph 2bis of Article 10bis is drafted as follows:

"2bis. Within the framework of cooperation referred to in the first paragraph of letter d) of the previous paragraph, the Bank of Spain, as supervisor on a consolidated basis of a group or as the competent authority responsible for the supervision of subsidiaries of a EU credit institution parent company or a EU financial holding company parent in Spain, will do everything in its power to reach a joint decision on the application of Article 6.4 of this Law and paragraph 1 of this Article to determine the adequacy of the consolidated level of own funds possessed by the group in relation to its financial situation and risk profile, and the level of own funds necessary for the application of Article 11, to each of the entities in the banking group and on a consolidated basis.

The joint decision will be adopted within a period of four months from the presentation by the supervisor on a consolidated basis, to the other relevant competent authorities, of a report including the risk assessment of the group, in accordance with Article 6.4 and paragraph 1 of this Article. The joint decision will also duly take into consideration the risk assessment of the subsidiaries carried out by the relevant competent authorities in accordance with Article 6.4 of this Law and paragraph 1 of this Article, and the reservations expressed by the other competent authorities.

The joint decision will be set out in a document containing the fully reasoned decision, which the Bank of Spain, when it is the supervisor on a consolidated basis, will forward to the EU credit institution parent company.

In case of disagreement and at the request of any of the other affected competent authorities, the Bank of Spain, before adopting the decision referred to in the following paragraph, will consult the European Banking Authority. The result of the consultation will not be binding on it.

In the absence of the aforementioned joint decision among the competent authorities within the four-month period, the Bank of Spain, when acting as supervisor on a consolidated basis, will adopt the decision regarding the application of paragraph 1 of this Article, as well as Articles 6.4 and 11 of this Law, on a consolidated basis, after duly taking into consideration the risk assessment of the subsidiaries carried out by the relevant competent authorities and, if applicable, the result of the consultation with the European Banking Authority, explaining any significant variation from the opinion received from it. If at the end of the four-month period any of the interested competent authorities has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation (EU) No 1093/2010, the Bank of Spain will postpone its resolution and wait for the decision that the European Banking Authority may adopt in accordance with Article 19, paragraph 3, of said Regulation. Subsequently, it will resolve in accordance with the decision of the European Banking Authority. The four-month period will be considered the conciliation period within the meaning of Article 19 of the aforementioned Regulation.

Likewise, in the absence of the aforementioned joint decision, the Bank of Spain, as responsible for the supervision of subsidiaries of a EU credit institution parent company or a EU financial holding company parent company, will take a decision on the application of paragraph 1 of this Article and Articles 6.4 and 11 of this Law, on an individual or sub-consolidated basis, after duly taking into consideration the observations and reservations expressed by the supervisor on a consolidated basis and, if applicable, the result of the consultation with the European Banking Authority, explaining any significant variation from the opinion received from it. If at the end of the four-month period any of the competent authorities involved has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation (EU) No 1093/2010, the Bank of Spain will postpone its resolution and wait for the decision that the European Banking Authority may adopt in accordance with Article 19, paragraph 3, of said Regulation. Subsequently, it will resolve in accordance with the decision of the European Banking Authority. The four-month period will be considered the conciliation period within the meaning of Article 19 of the aforementioned Regulation.

The decisions referred to in the two previous paragraphs will be set out in a document containing the fully reasoned decisions and will take into consideration the risk assessment, observations, and reservations expressed by the other competent authorities during the four-month period; the Bank of Spain, when acting as supervisor on a consolidated basis, will forward the document to all affected competent authorities and to the credit institution, EU parent company or affected subsidiary.

The joint decisions referred to in the first paragraph and the decisions of supervisors on a consolidated basis of other EU Member States, which affect Spanish credit institution subsidiaries of the consolidated groups referred to in such decisions, will have identical legal effects to the decisions adopted by the Bank of Spain.

The joint decision referred to in the first paragraph and the decisions adopted in the absence of a joint decision in accordance with paragraphs four and five will be updated annually or, in exceptional circumstances, when a competent authority responsible for the supervision of subsidiaries of a EU credit institution parent company or a EU financial holding company parent company submits a fully reasoned written request to the supervisor on a consolidated basis to act."

cve: BOE-A-2012-4091

OFFICIAL STATE BULLETIN No. 72 Saturday, March 24, 2012 Sec. I. Page 25484

and 2009/65/EC in relation to the powers of the European Supervisory Authority (European Banking Authority), the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority).

In November 2008 the Commission tasked a high-level expert group chaired by Jacques de Larosière with drawing up a series of recommendations on how to strengthen supervision measures with a view to improving citizen protection and restoring confidence in the financial system. In its final report presented on 25 February 2009 ("the de Larosière Report"), the high-level expert group recommended strengthening the supervision framework in order to reduce the risk and severity of future financial crises.

Following this report, the European Council, in the conclusions following its meeting of 18 and 19 June 2009, recommended the creation of a European System of Financial Supervisors composed of three new European Supervisory Authorities, which led to the approval of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing the European Banking Authority; Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing the European Insurance and Occupational Pensions Authority; and Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing the European Securities and Markets Authority.

The modification of the institutional supervision architecture established within the European Union made it necessary to adapt existing Community legislation to the new architecture and the new procedures derived from the new supervision scheme, which occurred through the approval of the aforementioned Directive 2010/78/EU.

Directive 2010/78/EU proceeded to introduce modifications to the sectoral directives in order to integrate the newly created authorities into the European framework of cooperation between supervisors, and to allow these authorities to perform the functions established in their respective regulations.

Taking the above into account, and in parallel with the modifications made within the European Union, this Royal Decree-Law incorporates into national law the modifications introduced by Directive 2010/78/EU, with the exception of the rules relating to money laundering, which will be subject to transposition in a regulatory norm; and those relating to collective investment undertakings, which are subject to transposition through Law 31/2011, of 4 October, amending Law 35/2003, of 4 November, on Collective Investment Institutions and its development regulations.

To carry out this transposition, the Royal Decree-Law contains provisions whose content focuses on the following elements: First, obligation to cooperate with the European Banking Authority, the European Securities and Markets Authority and the European Systemic Risk Board. Second, communication to the European Banking Authority and the European Securities and Markets Authority of various aspects related to the supervision of the solvency of financial entities. Third, introduction of the binding mediation mechanism of the European Banking Authority and the European Securities and Markets Authority in case of conflicts between supervisors of different Member States. Fourth, obligation to consult the European Banking Authority. Fifth, information to the European Insurance and Occupational Pensions Authority on certain aspects related to the activity and supervision of employment pension funds.

Taking these premises into account, this Royal Decree-Law is integrated by seven articles, each of which introduces modifications, along the lines indicated above, to the following laws: Law 13/1985, of 25 May, on investment coefficients, own funds and information obligations of financial intermediaries; Legislative Royal Decree 1298/1986, of 28 June, on Adaptation of Current Law in Matters of Credit Institutions to that of the European Communities; Law 24/1988, of 28 July, on the Securities Market; Law 26/1988, of 29 July, on Discipline and Intervention of Credit Institutions; Law 41/1999, of 12 November, on payment systems and securities settlement; Legislative Royal Decree 1/2002, of 29 November, approving the consolidated text of the Law on the Regulation of Pension Plans and Funds; Law 5/2005, of 22 April, on the supervision of financial conglomerates and amending other laws of the financial sector.

The measures contemplated in this Royal Decree-Law aim to adapt the national supervision scheme to the obligations derived from European Union law that establish a new European supervision framework equipped with those instruments considered essential to avoid the reproduction of financial practices that were at the origin of the economic crisis. This adaptation must be carried out with the utmost speed, as only in this way will the European supervision scheme have effective implementation in our country in coordination with the rest of the Member States, as European regulations require.

III The serious economic crisis situation has generated a sharp fall in economic activity and a corresponding sharp drop in revenue collection by territorial administrations. This is causing accumulated delays in the payment of obligations contracted with their suppliers, with the consequent negative impact on the liquidity of companies and the destruction of employment. This situation is aggravated by the stringent restrictions on access to credit and the banking discount of those pending payments.

With the aim of providing solutions to this serious situation, the Government approved Royal Decree-Law 7/2012, of 9 March, creating the Fund for the financing of payments to suppliers, which complements what is provided in Royal Decree-Law 4/2012, of 24 February, determining information obligations and procedures necessary to establish a financing mechanism for payments to suppliers of local entities. For its correct application and to dispel uncertainties, a modification of some aspects of Royal Decree-Law 7/2012, of 9 March, creating the Fund for the financing of payments to suppliers, is included, with the objective of facilitating its urgent and immediate application with greater legal certainty.

In virtue thereof, making use of the authorization contained in Article 86 of the Spanish Constitution, upon proposal of the Minister of Economy and Competitiveness, and after deliberation by the Council of Ministers in its meeting on 23 March 2012,

I HEREBY ORDER:

Article 1. Modification of Law 13/1985, of 25 May, on investment coefficients, own funds and information obligations of financial intermediaries.

Law 13/1985, of 25 May, on investment coefficients, own funds and information obligations of financial intermediaries, is modified as follows:

One. Letter d) of paragraph 2 of Article 10bis is drafted as follows:

"d) Cooperate closely with other competent authorities with supervisory responsibility over foreign credit institutions, parent companies, subsidiaries or participations of the same group under the terms provided in Article 6 of Legislative Royal Decree 1298/1986, of 28 June.

In particular, the Bank of Spain will cooperate with the aforementioned competent authorities in granting authorization for the use of internal credit ratings or internal methods for measuring operational risk to be applied in Spanish groups of credit institutions and in determining the conditions to which such authorization must be subject, if any.

The authorization requests mentioned in the previous paragraph, submitted by a credit institution parent company of the European Union and its subsidiaries, or jointly by the subsidiaries of a parent financial holding company of the European Union, shall be addressed to the Bank of Spain, in its capacity as the authority responsible for exercising supervision of consolidatable groups of credit institutions.

In these cases, within a period not exceeding six months, the Bank of Spain will promote the adoption of a joint decision on the request with the other competent authorities of other Member States responsible for the supervision of the various entities integrated into the group. The reasoned resolution recording this joint decision will be notified to the applicant by the Bank of Spain.

The period referred to in the previous paragraph shall begin on the date of receipt of the complete application by the Bank of Spain. The Bank of Spain will forward said application without delay to the other competent authorities.

In the absence of a joint decision between the Bank of Spain and the other competent authorities within the six-month period, the Bank of Spain will resolve on the request. The reasoned resolution will take into account the opinions and reservations of the other competent authorities expressed during the six-month period. The reasoned resolution will be notified to the applicant and to the other competent authorities by the Bank of Spain.

If at the end of the six-month period any of the competent authorities involved has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council, of 24 November 2010, establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC, the Bank of Spain will postpone its resolution and wait for the decision that the European Banking Authority may adopt in accordance with Article 19, paragraph 3, of said Regulation. Subsequently, it will resolve in accordance with the decision of the European Banking Authority. The six-month period will be considered the conciliation period within the meaning of Article 19 of the aforementioned Regulation.

In the case of the equivalent procedure governing, as provided in Directive 2006/48/EC of the European Parliament and of the Council, of 14 June 2006, on the taking up and pursuit of the business of credit institutions, the aforementioned authorizations when they concern groups of foreign credit institutions in which a Spanish credit institution is integrated, the Bank of Spain, in addition to cooperating in the joint decision to be adopted, may accept, if appropriate, the decisions adopted by the competent authorities of other Member States of the European Union when they are responsible for exercising supervision of those groups. The affected Spanish entity will calculate its own fund requirements in accordance with said decision.

Regulatory provisions may specify the terms of the cooperation procedure referred to in this letter."

Two. Letter e) of paragraph 2 of Article 10bis is drafted as follows:

"e) Sign coordination and cooperation agreements with other competent authorities aimed at facilitating and establishing effective supervision of the groups entrusted to their supervision and assuming the additional tasks resulting from such agreements.

In particular, the Bank of Spain may sign a bilateral agreement in accordance with Article 28 of Regulation (EU) No 1093/2010, to delegate its supervisory responsibility for a subsidiary entity to the competent authorities that have authorized and supervise the parent company, in order for them to monitor the subsidiary in accordance with the provisions provided in this law and its development regulations. The Bank of Spain must inform the European Banking Authority of the existence and content of such agreements."

Three. Letter f) of paragraph 2 of Article 10bis is drafted as follows:

"f) Notify, as soon as possible, the holder of the Ministry of Economy and Competitiveness, the remaining national or foreign supervisory authorities affected, the European Banking Authority, and the European Systemic Risk Board, of the emergence of an emergency situation, including a situation as defined in Article 18 of Regulation (EU) No 1093/2010 and, in particular, in those cases where there is an adverse evolution of financial markets that may compromise liquidity in the market and the stability of the financial system of any Member State of the European Union in which entities of a group subject to supervision on a consolidated basis by the Bank of Spain have been authorized or in which significant branches of a Spanish credit institution are established, as contemplated in the following letter g)."

Four. Paragraph 2bis of Article 10bis is drafted as follows:

"2bis. Within the framework of cooperation referred to in the first paragraph of letter d) of the previous paragraph, the Bank of Spain, as supervisor on a consolidated basis of a group or as the competent authority responsible for the supervision of subsidiaries of a EU credit institution parent company or a EU financial holding company parent in Spain, will do everything in its power to reach a joint decision on the application of Article 6.4 of this Law and paragraph 1 of this Article to determine the adequacy of the consolidated level of own funds possessed by the group in relation to its financial situation and risk profile, and the level of own funds necessary for the application of Article 11, to each of the entities in the banking group and on a consolidated basis.

The joint decision will be adopted within a period of four months from the presentation by the supervisor on a consolidated basis, to the other relevant competent authorities, of a report including the risk assessment of the group, in accordance with Article 6.4 and paragraph 1 of this Article. The joint decision will also duly take into consideration the risk assessment of the subsidiaries carried out by the relevant competent authorities in accordance with Article 6.4 of this Law and paragraph 1 of this Article, and the reservations expressed by the other competent authorities.

The joint decision will be set out in a document containing the fully reasoned decision, which the Bank of Spain, when it is the supervisor on a consolidated basis, will forward to the EU credit institution parent company.

In case of disagreement and at the request of any of the other affected competent authorities, the Bank of Spain, before adopting the decision referred to in the following paragraph, will consult the European Banking Authority. The result of the consultation will not be binding on it.

In the absence of the aforementioned joint decision among the competent authorities within the four-month period, the Bank of Spain, when acting as supervisor on a consolidated basis, will adopt the decision regarding the application of paragraph 1 of this Article, as well as Articles 6.4 and 11 of this Law, on a consolidated basis, after duly taking into consideration the risk assessment of the subsidiaries carried out by the relevant competent authorities and, if applicable, the result of the consultation with the European Banking Authority, explaining any significant variation from the opinion received from it. If at the end of the four-month period any of the interested competent authorities has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation (EU) No 1093/2010, the Bank of Spain will postpone its resolution and wait for the decision that the European Banking Authority may adopt in accordance with Article 19, paragraph 3, of said Regulation. Subsequently, it will resolve in accordance with the decision of the European Banking Authority. The four-month period will be considered the conciliation period within the meaning of Article 19 of the aforementioned Regulation.

Likewise, in the absence of the aforementioned joint decision, the Bank of Spain, as responsible for the supervision of subsidiaries of a EU credit institution parent company or a EU financial holding company parent company, will take a decision on the application of paragraph 1 of this Article and Articles 6.4 and 11 of this Law, on an individual or sub-consolidated basis, after duly taking into consideration the observations and reservations expressed by the supervisor on a consolidated basis and, if applicable, the result of the consultation with the European Banking Authority, explaining any significant variation from the opinion received from it. If at the end of the four-month period any of the competent authorities involved has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation (EU) No 1093/2010, the Bank of Spain will postpone its resolution and wait for the decision that the European Banking Authority may adopt in accordance with Article 19, paragraph 3, of said Regulation. Subsequently, it will resolve in accordance with the decision of the European Banking Authority. The four-month period will be considered the conciliation period within the meaning of Article 19 of the aforementioned Regulation.

The decisions referred to in the two previous paragraphs will be set out in a document containing the fully reasoned decisions and will take into consideration the risk assessment, observations, and reservations expressed by the other competent authorities during the four-month period; the Bank of Spain, when acting as supervisor on a consolidated basis, will forward the document to all affected competent authorities and to the credit institution, EU parent company or affected subsidiary.

The joint decisions referred to in the first paragraph and the decisions of supervisors on a consolidated basis of other EU Member States, which affect Spanish credit institution subsidiaries of the consolidated groups referred to in such decisions, will have identical legal effects to the decisions adopted by the Bank of Spain.

The joint decision referred to in the first paragraph and the decisions adopted in the absence of a joint decision in accordance with paragraphs four and five will be updated annually or, in exceptional circumstances, when a competent authority responsible for the supervision of subsidiaries of a EU credit institution parent company or a EU financial holding company parent company submits a fully reasoned written request to the supervisor on a consolidated basis to act."

cve: BOE-A-2012-4091