Royal Decree-Law 19/2011, of December 2, amending Royal Decree-Law 16/2011, of October 14, which created the Deposit Guarantee Fund for Credit Institutions

OFFICIAL STATE GAZETTE No. 291 Saturday, December 3, 2011 Sec. I. Page 128782 I. GENERAL PROVISIONS HEAD OF STATE 19035 Royal Decree-Law 19/2011, of December 2, amending Royal Decree-Law 16/2011, of October 14, which created the Deposit Guarantee Fund for Credit Institutions. Royal Decree-Law 16/2011, of October 14, which created the Deposit Guarantee Fund for Credit Institutions, carried out the largest reform of the regulation of the deposit guarantee system in Spain since its foundation with a dual objective aimed at completing the recapitalization and restructuring of the financial system. Firstly, the reform addressed the unification of the three existing deposit guarantee funds into a single Deposit Guarantee Fund for Credit Institutions, maintaining the functions and characteristic features of the three funds it replaced. Secondly, it aimed at updating and strengthening the resolution function of the unified Fund to ensure its flexible action in reinforcing the solvency and operation of institutions. The essential principle on which this reform was based, a principle that both international financial bodies and the Government have placed at the core of intervention in the face of the financial crisis, is that the costs incurred by the restructuring of the financial sector should be borne by the sector itself, so that the costs of the private sector are not transferred to the public treasury, i.e., to the taxpayer, and this without prejudice to maintaining the stability and solvency of the financial system. This Royal Decree-Law proceeds to complete and reinforce said system reform, revising the legally established cap for annual contributions that institutions must make to the fund, raising it from 2 to 3 per thousand to ensure that the Fund is endowed with its maximum operational capacity. Additionally, the ministerial orders that, in accordance with the current regime, established a temporary and optional reduction of institutions' contributions to 0.6, 0.8, and 1 per thousand, respectively, depending on the type of institutions, a legacy derived from the existence of the three previous guarantee funds, are expressly repealed. The result of both changes is the establishment, in a law-ranking norm, of a cap of 3 per thousand contributions for guaranteed deposits and the establishment of a real contribution of 2 per thousand instead of the previously indicated percentages. Secondly, the Royal Decree-Law aims at clarifying and technically improving Royal Decree-Law 16/2011 in those aspects that could generate legal uncertainty. In particular, it clarifies and systematizes the set of resources from which the Fund can draw to fully fulfill its functions and also clarifies the support instruments that the Fund can use to face losses incurred in banking sector restructuring actions derived from Royal Decree-Law 9/2009, of June 26. This Royal Decree-Law consists of a single article modifying Royal Decree-Law 16/2011, of October 14, which created the Deposit Guarantee Fund for Credit Institutions, divided into four sections. The first section rewords article 6.2 of Royal Decree-Law 16/2011, of October 14, in order to clarify and systematize the set of resources from which the Fund will draw to fully fulfill its functions. These resources are, firstly, the ordinary contribution regime itself, secondly, the levies that may be claimed, and finally, resources raised through any financial borrowing operation of the Fund. Additionally, it is cve: BOE-A-2011-19035

OFFICIAL STATE GAZETTE No. 291 Saturday, December 3, 2011 Sec. I. Page 128783 expressly emphasized that the Fund must restore the sufficiency of its assets when they prove insufficient for the fulfillment of its functions. The second section aims at raising the cap on annual contributions that institutions adhering to the Fund must pay, raising said cap to 3 per thousand. At the same time, the regulatory repeal provided for in the Royal Decree-Law entails the automatic increase of contributions to 2 per thousand, as established in article 3 of Royal Decree 2606/1996, of December 20, on Deposit Guarantee Funds for Credit Institutions. Such regulatory repeal implies that the regime for reducing institutions' contributions established in such ministerial orders is rendered ineffective. Section three merely aims at maintaining the current majority regime for decision-making in the Fund, adapting the wording to the numbering changes derived from the previous sections and clarifying it. And, finally, section four clarifies the financial support instruments that the Fund can use through article 12 of Royal Decree-Law 16/2011, of October 14. The adoption of the measures contemplated in this Royal Decree-Law, and in particular, both the increase in the legal limit of contributions and the repeal of the ministerial orders for their reduction, is essential to strengthen confidence in our financial system and complete the recapitalization and restructuring process of our financial system with the minimum cost to the public treasury. The strengthening of the Fund to increase its available resources, both in financial terms and in terms of the powers at its disposal, is necessary. Additionally, as has happened on previous occasions of reform of deposit guarantee systems, the special sensitivity of the matter makes it necessary to avoid any eventual uncertainty derived from the ordinary process of regulatory modification. It is for all these reasons that the adoption of such measures requires resorting to the Royal Decree-Law procedure, fulfilling the requirements of article 86 of the Spanish Constitution regarding its extraordinary and urgent necessity. By virtue thereof, making use of the authorization contained in article 86 of the Spanish Constitution, at the proposal of the Vice-President of the Government for Economic Affairs and Minister of Economy and Finance, and after deliberation by the Council of Ministers at its meeting on December 2, 2011, I HEREBY ORDER: Sole Article. Amendment of Royal Decree-Law 16/2011, of October 14, which created the Deposit Guarantee Fund for Credit Institutions. Royal Decree-Law 16/2011, of October 14, which created the Deposit Guarantee Fund for Credit Institutions, is amended as follows: One. Section 2 of article 6 is reworded as follows: «2. For the fulfillment of its functions, the Fund shall draw on the following resources: a) The annual contributions provided for in the following section. b) The levies made by the Fund among the institutions adhering to it, distributed according to the calculation basis of the contributions. c) Resources raised in securities markets, loans, or any other borrowing operations. In any case, when the Fund's assets prove insufficient for the performance of its functions, the Fund shall take the necessary actions to restore their sufficiency.» cve: BOE-A-2011-19035

OFFICIAL STATE GAZETTE No. 291 Saturday, December 3, 2011 Sec. I. Page 128784 Two. A new section 3 is added to article 6, which is reworded as follows: «3. The Fund shall be financed, under the terms to be determined by regulation, with annual contributions from the credit institutions integrated into it, the amount of which shall be up to 3 per thousand of the deposits covered by its guarantee, depending on the type of credit institutions. Contributions to the Fund shall be suspended when the uncommitted equity fund in operations specific to the Fund's purpose equals or exceeds 1% of the deposits of the institutions assigned to it.» Three. The second paragraph of section 5 of article 7 is reworded as follows: «However, a two-thirds majority shall be required to agree on the levies provided for in article 6.2.b), and for the measures contemplated within the framework of the action plans referred to in article 11.» Four. Article 12 is reworded as follows: «Article 12. Support measures for the restructuring and strengthening of an institution's own resources.

1. In the event of an orderly restructuring of a credit institution carried out within the corresponding plan approved by the Bank of Spain in the cases provided for in article 7.1 of Royal Decree-Law 9/2009, of June 26, on banking restructuring and strengthening of credit institutions' own resources, the Management Commission of the Deposit Guarantee Fund for Credit Institutions may execute any of the actions provided for in article 13.1 in favor of the financial institutions participating in the restructuring up to the limit of the losses caused by such operation. Similarly, in the event that financial support measures are adopted for the strengthening of a credit institution's own resources by virtue of article 9 of Royal Decree-Law 9/2009, of June 26, the Management Commission of the Deposit Guarantee Fund for Credit Institutions may execute any of the actions provided for in article 13.1 in favor of the financial institutions participating in the operation up to the limit of the losses caused by such operation.
2. The Management Commission may agree to the provisions of the previous section taking into account the benefit of the entire system of adhering institutions and provided that the estimated cost to it is lower than the disbursements it would have had to make if it had opted, at the time of adopting the plan, to pay the guaranteed amounts instead.» Sole Repealing Provision. Regulatory Repeal. All norms of equal or lower rank that oppose the provisions of this Royal Decree-Law are repealed, and in particular, Order ECO/318/2002, of February 14, Order ECO/2801/2003, of October 3, and Order EHA/3515/2009, of December 29. First Final Provision. Competence Titles. This royal decree-law is issued under the provisions of rules 6, 11, and 13 of article 149.1 of the Spanish Constitution, which attributes to the State competence over commercial legislation, bases of credit, banking, and insurance regulation, and bases and coordination of general economic activity planning, respectively. cve: BOE-A-2011-19035

OFFICIAL STATE GAZETTE No. 291 Saturday, December 3, 2011 Sec. I. Page 128785 Second Final Provision. Entry into force. This royal decree-law shall enter into force on the same day of its publication in the "Official State Gazette". Given in Madrid, on December 2, 2011. JUAN CARLOS R. The President of the Government, JOSÉ LUIS RODRÍGUEZ ZAPATERO cve: BOE-A-2011-19035 http://www.boe.es OFFICIAL STATE GAZETTE D. L.: M-1/1958 - ISSN: 0212-033X