Law 11/2015, of June 18, on the Recovery and Resolution of Credit Institutions and Investment Firms (Correction of Errors)

Law 11/2015, of June 18, on the Recovery and Resolution of Credit Institutions and Investment Firms. (Correction of Errors)

Head of State "BOE" No. 146, of June 19, 2015 Reference: BOE-A-2015-6789

INDEX

Preamble ................................................................ 8 CHAPTER I. General Provisions ............................................... 14 Article 1. Object and Scope of Application.......................................... 14 Article 2. Definitions. .................................................... 15 Article 3. Resolution Objectives. ........................................... 17 Article 4. Resolution Principles. ............................................ 17 Article 5. Valuation. ..................................................... 18 CHAPTER II. Early Intervention .................................................. 19 Section 1. Early Intervention Planning ...................................... 19 Article 6. Recovery Plan. .............................................. 19 Section 2. Intragroup Financial Aid ............................................. 20 Article 7. Financial Aid Agreements within a Group. ............................ 20 Section 3. Early Intervention .................................................. 20 Article 8. Conditions for Early Intervention................................... 20 Article 9. Early Intervention Measures. ....................................... 21 Article 10. Appointment or Replacement of Administrators as an Early Intervention Measure. ........................................................... 22 Article 11. Monitoring of Early Intervention Measures and Information to Resolution Authorities. .......................................................... 22 CONSOLIDATED LEGISLATION Page 1

Article 12. Coordination of Early Intervention Measures in Groups of Entities of the European Union............................................................. 22 CHAPTER III. Preventive Phase of Resolution ......................................... 23 Section 1. Resolution Planning ............................................ 23 Article 13. Resolution Plans. ............................................. 23 Article 14. Group Resolution Plans. ....................................... 23 Section 2. Resolvability Assessment ........................................... 24 Article 15. Resolvability Assessment of Entities. ............................... 24 Article 16. Resolvability Assessment of Groups. ................................. 25 Article 16 bis. Power to Prohibit Certain Distributions. ......................... 25 Article 17. Obstacles to the Resolvability of Entities................................. 26 Article 18. Obstacles to the Resolvability of Groups. ................................. 28 CHAPTER IV. Resolution ....................................................... 29 Article 19. Conditions for Resolution. ....................................... 29 Article 19 bis. Insolvency Proceedings in Relation to Entities and Companies Not Subject to a Resolution Process. ........................................ 30 Article 20. Concept of Unviable Entity. ........................................ 30 Article 21. Opening of the Resolution Process. .................................... 31 Article 22. Replacement of the Administrative Body and General Managers or Equivalent as a Resolution Measure. ................................................... 31 Article 23. Content of the Decision Regarding the Initiation of Resolution Processes. ......... 32 Article 24. Notification and Publication Obligations. ................................ 32 CHAPTER V. Resolution Tools ............................................. 33 Section 1. Resolution Tools ............................................. 33 Article 25. Definition of Resolution Tools and General Rules. .................. 33 Article 26. Sale of the Entity's Business........................................ 34 Article 27. Bridge Institution. ................................................. 35 Article 28. Asset Management Company. ....................................... 37 Article 29. Regime for the Transfer of Assets. ................................... 37 Article 30. Supervisory Regime for Asset Management Companies. ................. 38 Section 2. Recapitalization Operations .......................................... 39 Article 31. Recapitalization Operations Using Resources of the National Resolution Fund. ........................................................... 39 OFFICIAL GAZETTE OF THE STATE CONSOLIDATED LEGISLATION Page 2

Article 32. Ordinary Shares or Capital Contributions. .......................... 39 Article 33. Instruments Convertible into Ordinary Shares or Capital Contributions. ....... 40 Article 34. Special Regime for the Subscription or Acquisition by the FROB of Recapitalization Instruments. ..................................................... 40 CHAPTER VI. Write-down and Conversion of Capital Instruments and Internal Bail-in ........... 40 Section 1. General Provisions ............................................... 40 Article 35. Write-down and Conversion of Capital Instruments and Internal Bail-in. ........ 40 Article 36. Amount of Recapitalization. ........................................ 41 Article 37. Effects of the Write-down and Conversion of Capital Instruments and Internal Bail-in.............................................................. 41 Section 2. Write-down and Conversion of Relevant Capital Instruments and Eligible Liabilities ....... 42 Article 38. Write-down and Conversion of Relevant Capital Instruments and Eligible Liabilities. ... 42 Article 39. Rules on the Write-down or Conversion of Relevant Capital Instruments and Eligible Liabilities.................................................... 43 Section 3. Internal Bail-in ............................................... 44 Article 40. Internal Bail-in. ........................................... 44 Section 4. Liabilities Susceptible to Internal Bail-in ................................ 45 Article 41. Liabilities Susceptible to Internal Bail-in. ............................ 45 Article 42. Liabilities Mandatory Excluded from Internal Bail-in. ................. 45 Article 43. Liabilities Susceptible to Exclusion from Internal Bail-in by Decision of the FROB. ... 46 Section 4 bis. Minimum Requirement for Own Funds and Eligible Liabilities.................... 47 Article 44. Determination of the Minimum Requirement for Own Funds and Eligible Liabilities. ....... 47 Article 44 bis. Eligible Liabilities for Resolution Entities. ....................... 48 Article 44 ter. Criteria for Setting the Minimum Requirement for Own Funds and Eligible Liabilities. .......................................................... 48 Article 44 quater. Exemption from the Minimum Requirement for Own Funds and Eligible Liabilities. ...... 49 Article 45. Elimination of Obstacles Preventing Internal Bail-in................ 49 Article 46. Contractual Recognition of Internal Bail-in. ...................... 50 Section 5. Application of the Internal Bail-in Instrument............................ 51 Article 47. Treatment of Shareholders. ....................................... 51 Article 48. Sequence and Special Rules of Internal Bail-in. .................... 52 Article 49. Business Reorganization Plan. .................................. 53 Section 6. Other Contributions to Internal Bail-in ............................... 53 OFFICIAL GAZETTE OF THE STATE CONSOLIDATED LEGISLATION Page 3

Article 50. Conditions for the Contribution of the National Resolution Fund. ............... 53 Article 51. Alternative Financing Sources..................................... 54 CHAPTER VII. FROB .......................................................... 55 Section 1. Nature, Composition and Legal Regime ................................... 55 Article 52. FROB. ....................................................... 55 Article 53. Financing Mechanisms and Budgetary Endowment......................... 56 Article 54. Governing Commission. ............................................... 57 Article 55. President. .................................................... 59 Article 56. Parliamentary Control. ............................................. 60 Article 57. Cooperation and Coordination with Other Competent National Authorities. .......... 60 Article 58. Cooperation and Coordination with Other International Authorities. ................ 60 Article 59. Duty of Secrecy. ................................................ 61 Article 60. Application of Competition Rules. ............................... 62 Article 61. Adoption of International Recommendations. ............................. 62 Section 2. Powers of the FROB ................................................. 63 Article 62. Powers of the FROB. ............................................. 63 Article 63. Commercial Powers. ............................................ 63 Article 64. General Administrative Powers. ................................... 63 Article 65. Executive Nature of Measures. ..................................... 64 Article 66. Exclusion of Certain Contractual Conditions in Early Intervention and Resolution. .......................................................... 65 Article 67. Partial Transfer of Assets and Liabilities. ................................. 65 Article 68. Urgency Measures. ............................................. 66 Article 69. Publicity. .................................................... 66 Section 3. Powers to Suspend Contracts ..................................... 67 Article 70. Powers to Suspend Payment Obligations, Contracts and Guarantees. ........... 67 Article 70 bis. Powers to Suspend After the Opening of the Resolution Process. ............ 67 Article 70 ter. Powers to Suspend Prior to the Opening of a Resolution Process. .......................................................... 68 Article 70 quater. Scope of Application of the Powers to Suspend Payment or Delivery Obligations. ............................................................ 69 Article 70 quinquies. Contractual Recognition of the Powers to Suspend Resolution. .. 69 CHAPTER VIII. Procedural Regime.................................................. 70 OFFICIAL GAZETTE OF THE STATE CONSOLIDATED LEGISLATION Page 4

Article 71. Actions Against Decisions and Agreements of the FROB Adopted in the Exercise of its Commercial Powers Provided for in Article 63................................... 70 Article 72. Specialties of the Appeal Against Decisions and Administrative Acts Issued in the Framework of Early Intervention and Resolution Processes. ............................. 70 Article 73. Specialties of the Appeal Against Decisions and Administrative Acts Issued in Matters of Write-down or Conversion of Capital Instruments and Internal Bail-in. ....... 71 Article 74. Impossibility of Execution of Judgment Issued in the Administrative Litigation Appeals Referenced in Articles 72 and 73................................ 71 CHAPTER IX. Sanctioning Regime ................................................ 72 Section 1. General Provisions ............................................... 72 Article 75. General Provisions. ........................................... 72 Article 76. Competence for the Instruction of Proceedings. ............................ 72 Article 77. Statute of Limitations for Offenses and Sanctions.................................. 73 Section 2. Offenses ....................................................... 73 Article 78. Classes of Offenses. ............................................ 73 Article 79. Very Serious Offenses. ........................................... 73 Article 80. Serious Offenses. .............................................. 75 Article 81. Minor Offenses. ............................................... 76 Section 3. Sanctions ........................................................ 77 Article 82. Sanctions. .................................................... 77 Article 83. Sanctions for the Commission of Very Serious Offenses. ........................ 77 Article 84. Sanctions for the Commission of Serious Offenses. ........................... 77 Article 85. Sanctions for the Commission of Minor Offenses. ............................ 78 Article 86. Sanctions Against Those Holding Administrative or Management Positions for the Commission of Very Serious Offenses. ................................................. 78 Article 87. Sanctions Against Those Holding Administrative or Management Positions for the Commission of Serious Offenses. .................................................... 79 Article 88. Sanctions Against Those Holding Administrative or Management Positions for the Commission of Minor Offenses. ..................................................... 79 Article 89. Criteria for Determining Sanctions. .............................. 79 Article 90. Responsibility of Administrative or Management Positions. .................... 80 Article 91. Temporary Appointment of Members of the Administrative Body. ............... 80 Section 4. General Procedural Rules ....................................... 80 Article 92. Procedure for Imposing Sanctions. ............................ 80 Article 93. Enforceability of Sanctions and Appeal in Administrative Route. ................ 81 OFFICIAL GAZETTE OF THE STATE CONSOLIDATED LEGISLATION Page 5

Additional Provisions ...................................................... 81 First Additional Provision. Structure and Functioning of Preventive Resolution Authorities. 81 Second Additional Provision. Deadline for Endowment of the National Resolution Fund. ........... 81 Third Additional Provision. Legal Regime Applicable to Guarantees Established in Favor of the FROB and the Deposit Guarantee Fund of Credit Institutions. ........................ 81 Fourth Additional Provision. Single Resolution Mechanism and Single Resolution Fund. ....... 81 Fifth Additional Provision. Preservation of Financial Contract Records by Entities..... 82 Sixth Additional Provision. Integration of Deposit Guarantee Funds into Savings Banks, Banking Establishments and Credit Cooperatives. .............................. 82 Seventh Additional Provision. References to Law 9/2012, of November 14, on the Restructuring and Resolution of Credit Institutions. ........................................... 82 Eighth Additional Provision. Spanish Resolution Authority in the Scope of the Single Resolution Mechanism. .......................................................... 82 Ninth Additional Provision. Financial Entities and Other Types of Companies.................. 82 Tenth Additional Provision. General Viability Plans. ........................... 82 Eleventh Additional Provision. Constitution of the Governing Commission of the FROB. ............... 83 Twelfth Additional Provision. Authorized Capital for the Conversion of Capital Instruments in the Event of a Triggering Circumstance. .............................. 83 Thirteenth Additional Provision. Personnel of the Bank of Spain in the FROB................ 83 Fourteenth Additional Provision. Regime Applicable in Case of Insolvency of an Entity. ....... 83 Fifteenth Additional Provision. Effects of Early Intervention and Resolution Processes on the Continuity of an Entity's Activities. .............................. 84 Sixteenth Additional Provision. Fee for Activities Performed by the FROB as Resolution Authority. .......................................................... 85 Seventeenth Additional Provision. Legal Regime of the Official Credit Institute............. 85 Transitory Provisions ...................................................... 85 First Transitory Provision. Regime Applicable to Certain Restructuring, Recovery and Resolution Procedures. ................................................ 85 Second Transitory Provision. Rules on Internal Bail-in. ..................... 85 Third Transitory Provision. Administrative and Judicial Proceedings Initiated Prior to Entry into Force. ..................................................... 85 Fourth Transitory Provision. Annual Contributions to the Deposit Guarantee Compartment. ..... 86 Fifth Transitory Provision. Accrual of the Fee for Activities Performed by the FROB as Resolution Authority During the Year 2015...................................... 86 Sixth Transitory Provision. Adaptation to the Innovations of Directive 2013/50/EU of the European Parliament and of the Council, of October 22, 2013. ................................. 86 OFFICIAL GAZETTE OF THE STATE CONSOLIDATED LEGISLATION Page 6

Seventh Transitory Provision. Application of Final Provision First and Regulation (EU) No. 909/2014 of the European Parliament and of the Council, of July 23, 2014, on Improving Securities Settlement in the European Union and Central Securities Depositories and Amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No. 236/2012. ........... 86 Repealing Provisions ..................................................... 86 Repealing Provision. ................................................... 86 Final Provisions ......................................................... 86 First Final Provision. Modification of Law 24/1988, of July 28, on the Securities Market. .... 86 Second Final Provision. Modification of Law 6/1997, of April 14, on the Organization and Functioning of the General State Administration. ............................ 104 Third Final Provision. Modification of Law 29/1998, of July 13, Regulating the Administrative Litigation Jurisdiction. ............................................... 104 Fourth Final Provision. Modification of Law 41/1999, of November 12, on Payment Systems and Securities Settlement. ................................................ 104 Fifth Final Provision. Modification of Law 22/2003, of July 9, Insolvency. ............... 105 Sixth Final Provision. Modification of Law 35/2003, of November 4, on Collective Investment Institutions. ..................................................... 105 Seventh Final Provision. Modification of Royal Decree-Law 5/2005, of March 11, on Urgent Reforms to Boost Productivity and Improve Public Contracting. ......... 105 Eighth Final Provision. Modification of Law 6/2005, of April 22, on the Sanitation and Liquidation of Credit Institutions................................................. 106 Ninth Final Provision. Modification of Legislative Decree 1/2010, of July 2, Approving the Consolidated Text of the Capital Companies Law. ........................ 107 Tenth Final Provision. Modification of Royal Decree-Law 16/2011, of October 14, Creating the Deposit Guarantee Fund of Credit Institutions. ....................... 108 Eleventh Final Provision. Modification of Law 3/2012, of July 6, on Urgent Measures for the Reform of the Labor Market. ............................................... 112 Twelfth Final Provision. Modification of Law 10/2014, of June 26, on the Ordering, Supervision and Solvency of Credit Institutions. .................................. 114 Thirteenth Final Provision. Modification of Law 22/2014, of November 12, Regulating Venture Capital Entities, Other Closed-Ended Collective Investment Entities and Management Companies of Closed-Ended Collective Investment Entities, and Modifying Law 35/2003, of November 4, on Collective Investment Institutions. .................. 115 Fourteenth Final Provision. Competence Titles. ............................... 115 Fifteenth Final Provision. Incorporation of European Union Law. ................ 115 Sixteenth Final Provision. Development Power. ................................ 115 Seventeenth Final Provision. Entry into Force.................................... 115 OFFICIAL GAZETTE OF THE STATE CONSOLIDATED LEGISLATION Page 7

CONSOLIDATED TEXT Last Modification: March 18, 2023 FELIPE VI KING OF SPAIN To all who see and understand this. Know Ye: That the General Courts have approved and I come to sanction the following law: PREAMBLE I The growing complexity of the financial system, due to the size of the entities that comprise it, the greater sophistication of the products with which they operate, as well as their high interconnection, requires public authorities to have mechanisms and powers reinforced to face the potential situation of difficulty in which credit institutions or investment service companies may find themselves, respecting the essential idea, which underlies all the articles of the law, of avoiding any impact on the resources of taxpayers. During the financial crisis of recent years, most developed countries experienced, to a greater or lesser extent, the enormous challenge that entails carrying out the resolution of a credit institution in an orderly manner and without putting public money at stake. The above has shown that it is necessary to include in legal systems specific powers that allow public authorities to manage a process, that of the resolution of the entity, in an energetic and agile manner at the same time, respecting the rights of shareholders and creditors, but starting from the principle that it is they, and not citizens with their taxes, who must absorb the losses of the resolution. The specification of this new branch of financial regulation has been articulated progressively from the experiences of recent years in resolution processes of entities and from the coordinating activity of international forums with competence in financial policy, and has crystallized into a series of principles that, ultimately, support the articles of this Law, and which, due to their importance, it is convenient to explicitly state preliminarily. A basic principle from which the law starts is that traditional insolvency procedures, carried out in a judicial manner, are not, in many cases, useful for carrying out the restructuring or closure of an unviable financial entity. Given their size, the complexity and singularity of their sources of financing, q