Royal Decree-Law 6/2013 of 22 March on protection for holders of certain savings and investment products and other financial measures

OFFICIAL STATE BULLETIN No. 71 Saturday, March 23, 2013 Sec. I. Page 22901 I. GENERAL PROVISIONS HEAD OF STATE 3199 Royal Decree-Law 6/2013, of March 22, on protection for holders of certain savings and investment products and other measures of a financial nature. I Over the last few months, the Spanish financial sector has undertaken a process of sanitization of historic dimensions that will soon culminate with the full execution of the restructuring and resolution plans for those credit institutions with the greatest difficulties in viability and solvency. To carry out this process, our legal system was appropriately adapted through the promulgation of Law 9/2012, of November 14, on the restructuring and resolution of credit institutions. This law designed a framework for public action in institutional crises guided by the search for an adequate balance between financial stability and the limited and efficient use of public resources. To this end, so-called exercises for the management of hybrid instruments and subordinated debt were included in our legislation, aiming to guarantee a correct participation of an institution's creditors in the costs derived from its restructuring or resolution.

The execution of exercises for the management of hybrid capital instruments and subordinated debt is imminent, which, within the framework of Law 9/2012, of November 14, on the restructuring and resolution of credit institutions, and the Memorandum of Understanding signed between Spanish and European authorities on July 20, 2012, require certain restructuring and resolution plans for credit institutions.

It is necessary to monitor any claims that customers may direct to financial institutions regarding the marketing of these complex products and to facilitate agile dispute resolution mechanisms in certain cases, primarily through arbitration.

In this context and on an exceptional basis, it is necessary to offer liquidity to the shares that holders of these instruments will receive in exchange for them. To the extent that the issuing entities of said instruments do not trade on an official market and do not plan to do so within the restructuring plans approved by the European Commission, the lack of sufficient liquidity of their securities may pose a difficulty for retail clients. In order to mitigate the effects of this circumstance, the Deposit Guarantee Fund is granted the legal capacity to create market mechanisms that allow for an alternative liquidity source for these shares. Therefore, this Fund is endowed with the capacity to acquire the non-listed shares resulting from the mandatory exchanges of hybrid capital and subordinated debt instruments from these entities, at market prices.

To this end, it is endowed with sufficient resources to do so. Without prejudice to the payment schedule in which these resources are provided, the authorization of the extraordinary contribution will be registered as the Fund's equity on the date the first tranche is settled, and will allow for the necessary financial operations for the rapid implementation of market mechanisms for the acquisition of the shares in question.

Ultimately, this aims to expand the ordinary scope of action of the Fund in order to empower it to carry out an essential and rapid function to facilitate the adequate implementation of the ongoing banking restructuring process.

This royal decree-law consists of two articles, two additional provisions, a single repealing provision, which contains a generic repealing clause regarding any other norms of equal or lower rank that oppose what is provided herein, and six final provisions, among which, in addition to certain normative modifications, the corresponding references to the competent title, development powers, and the entry into force of the norm are made. cve: BOE-A-2013-3199

OFFICIAL STATE BULLETIN No. 71 Saturday, March 23, 2013 Sec. I. Page 22902 in this royal decree-law, and six final provisions, among which, in addition to certain normative modifications, the corresponding references to the competent title, development powers, and the entry into force of the norm are made. II Chapter I consists of a single article, which aims to create and regulate the composition and functioning of the Commission for the follow-up of hybrid capital and subordinated debt instruments.

In recent years, the number of claims by customers of financial institutions who had acquired hybrid capital and subordinated debt instruments has grown.

At this point, it is considered necessary to create a body with the highest institutional representation that coordinates and drives the necessary work to monitor certain incidents that may have arisen from the marketing of hybrid capital and subordinated debt instruments. Within this work, and with full respect for the competencies held by other bodies and the judiciary in matters of financial supervision and consumer and user protection, the Commission will analyze the factors generating judicial and extrajudicial claims, as well as their results, regarding the marketing of hybrid capital and subordinated debt instruments by entities in which the Bank Restructuring Orderly Resolution Fund (FROB) has participation, producing reports on their evolution, which will be sent to the Congress of Deputies. It will also determine the basic criteria for fixing, in the case of entities participated by FROB, when it must offer its clients submission to arbitration. This analysis will be carried out without any interference in the due independence and impartiality with which, in accordance with current legislation, judicial and arbitration procedures in consumer matters must be developed, and without implying an additional workload for the competent bodies, whether judicial or not, nor for the General Council of the Judiciary. III Article 2 of this royal decree-law modifies paragraph 4 and adds a new paragraph 5 to the fifth additional provision of Royal Decree-Law 21/2012, of July 13, on liquidity measures for public administrations and in the financial sector. The functions of the Deposit Guarantee Fund of Credit Institutions are expanded in an extraordinary and temporary manner in a double sense. On one hand, the Fund is allowed to subscribe to shares or debt of the Bank Restructuring Asset Management Society (hereinafter, SAREB), and on the other hand, it is authorized to acquire shares of entities that have transferred their assets to SAREB. This latter power will allow the Fund to acquire illiquid securities issued by non-listed entities, providing them with liquidity for the benefit of these entities' clients, in order to enable the sale at market conditions of the shares received in the mandatory exchanges that FROB must carry out within the ongoing restructuring and resolution processes.

Additionally, with the aim of maintaining a sound equity position of the Deposit Guarantee Fund of Credit Institutions, allowing it to adequately perform its function in favor of the stability of the Spanish financial system, a special contribution is established to it, applicable only once, of three per thousand (3‰) of the computable deposits. This contribution will be structured in two phases. A first phase of 40 percent, for which the Fund may agree on a series of deductions related to the size of the entities, their contributions to SAREB, or the receipt of public aid. And a second tranche, comprising the remaining 60 percent, to be paid starting in 2014 and within a maximum of 7 years, according to the payment schedule set by the Management Commission of the Deposit Guarantee Fund of Credit Institutions. cve: BOE-A-2013-3199

OFFICIAL STATE BULLETIN No. 71 Saturday, March 23, 2013 Sec. I. Page 22903 IV Regarding the final part of the royal decree-law, it includes certain additional provisions affecting international commitments assumed by Spain and others whose adoption is urgent, either because they are related to the resolution or restructuring of credit institutions, or because of their special relevance in the current economic context.

The first additional provision adopts various measures necessary to comply with the mandate contained in Regulation (EU) No. 260/2012 of the European Parliament and of the Council of March 14, 2012, establishing technical and business requirements for credit transfers and direct debits in euros, and amending Regulation (EC) No. 924/2009. The Minister of Economy and Competitiveness is empowered to grant authorizations and exemptions in the cases and terms provided for in said Regulation; the Bank of Spain is designated as the competent authority responsible for ensuring its compliance; and Article 51.3 of Law 16/2009, of November 13, on payment services, is modified to include the provisions of said Regulation as rules of order and discipline for payment service providers.

For its part, the second additional provision establishes that customer service and customer advocates of financial institutions will handle claims related to commitments subscribed by these entities within the framework of the mandate to the Government provided for in the single additional provision of Royal Decree-Law 27/2012, of November 15, on urgent measures to reinforce the protection of mortgage debtors, and in accordance with which the Social Housing Fund was created.

The first, second, and third final provisions undertake three specific legal modifications.

Thus, first, Articles 60, 61, and 65 of Law 44/2002 of November 22, on measures to reform the financial system, are modified to allow the Bank of Spain to set different declaration thresholds depending on the different purposes (supervision or registration of information) of the Bank of Spain's Risk Information Center. This reform responds to the reform commitments acquired by Spain within the framework of the Memorandum of Understanding signed for European financial assistance for the recapitalization of credit institutions.

Second, in the second final provision, Article 86 bis of the consolidated text of the Law on the Organization and Supervision of Private Insurance, approved by Royal Legislative Decree 6/2004, of October 29, is modified in order to allow Spanish insurance entities to compete on equal terms with insurance entities from other Member States, which can use subscription agencies to contract insurance. Articles 86 bis and 86 ter of the consolidated text of the Law on the Organization and Supervision of Private Insurance, which were added to it by the fourteenth final provision of Law 2/2011, of March 4, on the Sustainable Economy, cover the regulations applicable to subscription agencies. This regulation allows insurance entities domiciled in European Economic Area Member States other than Spain and exercising their activities in Spain under the right of establishment or the free provision of services regime to use subscription agencies. The modification of the aforementioned Article 86 bis aims to eliminate the competitive disadvantage with which Spanish entities have been operating compared to the rest, precisely in our own national market. It is considered that the removal of this artificial barrier is of urgent necessity, as it ends the unequal treatment between Spanish entities and those from other Member States, which can indeed appoint the aforementioned subscription agencies to insure for their own account and name.

Third, pursuant to the third final provision, Articles 36.4 and 44.2 of Law 9/2012, of November 14, on the restructuring and resolution of credit institutions, are modified, so that SAREB can effectively develop the functions entrusted to it. cve: BOE-A-2013-3199

OFFICIAL STATE BULLETIN No. 71 Saturday, March 23, 2013 Sec. I. Page 22904 The aforementioned final provision also modifies the wording of Article 44.2 b) of Law 9/2012, of November 14, on the restructuring and resolution of credit institutions, to clarify the terms in which the payment of the repurchase price of issuances or items of hybrid capital and subordinated debt instruments included in the scope of the management actions agreed by FROB may take place.

The above measures are framed in a context of urgent and extraordinary necessity derived from the imminence of their effects on the process of restructuring of credit institutions undertaken in Spain, and for the fulfillment of commitments acquired in accordance with the Memorandum of Understanding signed for European financial assistance for said restructuring.

In view of all the above, making use of the authorization contained in Article 86 of the Spanish Constitution, on the proposal of the Minister of Economy and Competitiveness, and after deliberation by the Council of Ministers in its meeting on March 22, 2013, I HEREBY ORDER: CHAPTER I Commission for the follow-up of hybrid capital and subordinated debt instruments Article 1. Commission for the follow-up of hybrid capital and subordinated debt instruments.

1. The Commission for the follow-up of hybrid capital and subordinated debt instruments (hereinafter, the "Commission") is created as a collegiate body attached to the Ministry of Economy and Competitiveness through the State Secretariat for Economy and Support for Business, charged with carrying out analysis of the factors generating judicial and extrajudicial claims regarding the marketing of hybrid capital and subordinated debt instruments by entities in which the Bank Restructuring Orderly Resolution Fund has participation, proposals related to their marketing, and determination of criteria for certain claims to be submitted to arbitration.

The Commission will exercise its functions with absolute respect for the competencies held by judicial bodies and bodies that make up the consumer arbitration system.

The Commission must be formally constituted within twenty days from the entry into force of this royal decree-law and will cease to exist two years after its constitution unless, if considered necessary for the adequate fulfillment of the functions for which it was created, its validity may be extended by agreement of the Council of Ministers for the period it determines. 2. The functions of the Commission shall be: a) The analysis of the factors that have motivated the presentation of judicial and extrajudicial claims by holders of hybrid capital and subordinated debt instruments against credit institutions in which the Bank Restructuring Orderly Resolution Fund has participation. b) The transmission to the Congress of Deputies, on a quarterly basis, of a report regarding the fundamental aspects of the claims referred to in the previous paragraph, without prejudice to the competencies on this matter that correspond to other bodies, organizations, or institutions.

The fundamental aspects on which the Commission may request and obtain information shall be understood to be those related to the amount of the claim, the judicial or extrajudicial channel chosen by the claimant, the geographic location of the marketing of the instrument, the outcome of the judgment or award, the basic grounds for the estimation or dismissal of the claim, the issuing entity, the client profile, and any other of an analogous nature deemed relevant for the adequate fulfillment of the functions entrusted to it. To this effect, Article 140 of Law 1/2000, of January 7, on Civil Procedure, shall apply to the Commission. c) Where appropriate, the submission of proposals to competent authorities with the aim of improving the protection of the acquirer of this type of products.

Additionally, the Commission will determine basic criteria that must be employed by entities participated by the Bank Restructuring Orderly Resolution Fund in order to offer their clients the submission to arbitration of disputes arising in relation to hybrid capital and subordinated debt instruments, in order that they may be adequately compensated for the economic harm suffered, in case of an award in their favor. Likewise, within the aforementioned criteria, the Commission will specify criteria for designating the group of clients whose claims, due to the special difficulty of their personal or family circumstances, must receive priority processing by entities participated by the Bank Restructuring Orderly Resolution Fund. The Commission will transfer these criteria to the Bank Restructuring Orderly Resolution Fund, which will give the necessary instructions for its participated entities to adopt them. The Commission will adopt the aforementioned criteria in its constitutive meeting and may review them quarterly. 3. Without prejudice to what is provided in the previous paragraph, the Commission will prepare, within one month of its constitution, a report on: a) The basic characteristics of the marketing between retail clients of hybrid capital and subordinated debt instruments in recent years. b) The most relevant statistical data of said marketing. c) The regulatory and supervisory framework for the protection of retail clients for the marketing of these products. d) The claims presented and their results.

Said report must be submitted to the Congress of Deputies. 4. The Commission shall be composed of the following members: a) The President of the National Securities Market Commission, who will preside over the Commission. b) The Deputy Governor of the Bank of Spain, as Vice President. c) The Secretary General of Health and Consumption, from the Ministry of Health, Social Services and Equality. d) The Secretary General of Treasury and Financial Policy, from the Ministry of Economy and Competitiveness. e) The President of the Council of Consumers and Users. 5. The Commission will be assisted by a secretary, who will be designated by the National Securities Market Commission, who will participate in meetings with voice but without vote.

Likewise, the Commission will invite to participate, with voice but without vote, the representatives designated by the consumption authorities of the autonomous communities and the National Institute of Consumption who have participated or will participate in the resolution procedures of the claims referred to in the first paragraph of paragraph 1 of this article.

A representative designated by the Bank Restructuring Orderly Resolution Fund will also attend the Commission's meetings, with voice but without vote.

The Commission may request the assistance to its meetings and the advice of technicians from public bodies or private entities whose participation may facilitate the best development of its functions. 6. In cases of absence or illness, and in general, when any justified cause occurs, the members of the Commission will be replaced by their substitutes, who will be designated by the heads of the Ministries or Bodies to which they belong or in which the titular members are appointed. cve: BOE-A-2013-3199

OFFICIAL STATE BULLETIN No. 71 Saturday, March 23, 2013 Sec. I. Page 22906 which will be designated by the heads of the Ministries or Bodies to which they belong or in which the titular members are appointed. 7. The Commission will determine its rules of functioning, which will adhere to what is provided in Chapter II of Title II of Law 30/1992, of November 26, on the Legal Regime of Public Administrations and Common Administrative Procedure, and the first additional provision of Law 11/2007, of June 22, on electronic access of citizens to Public Services may be applicable. The Commission will meet, at least quarterly, and whenever it is convened by its President, on its own initiative, or at the request of three of its members.

For the valid constitution of the Commission, for the purposes of holding sessions, deliberations, and adoption of decisions, the attendance of the President and the Secretary, or those who replace them, and two members will be necessary. Its agreements will be adopted by a majority of its members, with the President having a casting vote in case of a tie. 8. The functioning of this Commission will not imply any increase in public expenditure, being attended to with the existing personal and material means.

Its members will not receive any remuneration or allowance for the exercise of their functions. 9. The Bank Restructuring Orderly Resolution Fund must supply the Commission, for the adequate exercise of its functions, with information on the fundamental aspects of the arbitration and judicial procedures to which the entities controlled by it are subject, and in particular, on the compliance with the basic criteria referred to in the last paragraph of paragraph 2. CHAPTER II Article 2. Modification of the fifth additional provision of Royal Decree-Law 21/2012, of July 13, on liquidity measures for public administrations and in the financial sector. Paragraph 4 is modified and a new paragraph 5 is added to the fifth additional provision of Royal Decree-Law 21/2012, of July 13, on liquidity measures for public administrations and in the financial sector, with the following wording:

"4. Within the scope of its functions and taking into account the benefit of the entire system of affiliated entities, the Deposit Guarantee Fund of Credit Institutions may adopt measures aimed at facilitating the implementation of European financial assistance for the recapitalization of Spanish credit institutions. Among such measures, the Deposit Guarantee Fund of Credit Institutions may commit its equity for the provision of guarantees that might be required within the scope of said financial assistance. Such commitment and guarantees may be assumed by credit institutions within the framework of the recapitalization plans approved by the Bank of Spain.

Likewise, the possibility of subscription or acquisition by the Deposit Guarantee Fund of Credit Institutions of: a) shares or subordinated debt instruments issued by the Bank Restructuring Asset Management Society provided for in the"