Circular 2/2021 of the Bank of Spain, of January 28, amending Circular 8/2015 regarding information for determining the calculation bases for contributions to the Deposit Guarantee Fund of Credit Institutions

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Circular 2/2021, of January 28, of the Bank of Spain, amending Circular 8/2015, of December 18, of the Bank of Spain, to entities and branches affiliated with the Deposit Guarantee Fund of Credit Institutions, regarding information to determine the calculation bases for contributions to the Deposit Guarantee Fund of Credit Institutions. (BOE of February 2, 2021)

I

Royal Decree 1464/2018, of December 21, which develops the consolidated text of the Securities Market Law, approved by Royal Legislative Decree 4/2015, of October 23, and Royal Decree-Law 21/2017, of December 29, on urgent measures to adapt Spanish law to European Union regulations in the matter of securities markets, and which partially modifies Royal Decree 217/2008, of February 15, on the legal regime of investment service companies and other entities providing investment services, and which partially modifies the Regulation of Law 35/2003, of November 4, on Collective Investment Institutions, approved by Royal Decree 1309/2005, of November 4, and other royal decrees in the matter of securities markets, modified Royal Decree 217/2008, of February 15, on the legal regime of investment service companies and other entities providing investment services, and which partially modifies the Regulation of Law 35/2003, of November 4, on Collective Investment Institutions, approved by Royal Decree 1309/2005, of November 4 (hereinafter, "Royal Decree 217/2008"), introducing into it, among others, Articles 30 quater and 43.

Article 30 quater of Royal Decree 217/2008 provides for coverage by the Deposit Guarantee Fund of Credit Institutions (hereinafter, "FGD"), in the event of insolvency proceedings against a credit institution, of balances held by investment service companies in instrumental and transitional cash accounts opened in the name of the investment service company on behalf of its clients at the entity declared insolvent. In relation to the above, paragraph 3 of Article 43 of this norm adds that, when investment service companies deposit client cash in a credit institution, they must individualize the balances corresponding to each client and periodically communicate the individualized data of those to the credit institution.

For its part, Circular 8/2015, of December 18, of the Bank of Spain, to entities and branches affiliated with the Deposit Guarantee Fund of Credit Institutions, regarding information to determine the calculation bases for contributions to the Deposit Guarantee Fund of Credit Institutions (hereinafter, "Circular 8/2015"), establishes the information that credit institutions and branches affiliated with the FGD must send and keep available to the Bank of Spain regarding their guaranteed deposits, for the purpose of calculating their contributions to the aforementioned FGD.

The changes cited in Royal Decree 217/2008 make it necessary to modify Circular 8/2015, to establish how the new information that, in accordance with them, credit institutions and branches affiliated with the FGD must send and keep available to the Bank of Spain, in the state "Information to determine the calculation bases for contributions to the Deposit Guarantee Fund" and in the "Detailed register of deposits received", which appear, respectively, in annexes 1 and 2 of the aforementioned Circular 8/2015, should be collected.

At the same time, additional information requirements are introduced for entities and branches affiliated with the FGD, which ensure the correct compliance with the cooperation obligations of the FGD established at the European level and which derive from the current regulatory framework on this matter. In particular, Article 9.8 of Royal Decree 2606/1996, of December 20, on deposit guarantee funds of credit institutions (hereinafter, "Royal Decree 2606/1996"), incorporated into this norm by Royal Decree 1012/2015, of November 6, which develops Law 11/2015, of June 18, on the recovery and resolution of credit institutions and investment service companies, and which modifies Royal Decree 2606/1996, of December 20, on deposit guarantee funds of credit institutions, provides that, within the framework of the cross-border payment system, the Spanish FGD will periodically communicate to the deposit guarantee system of the host Member State, where entities affiliated with the Spanish FGD have established branches, information on the aggregated amount of admissible and guaranteed deposits of each depositor.

II

This circular consists of a single provision and a final provision.

The single provision modifies Circular 8/2015 in the following manner:

– Article 3 is modified to replace references to the repealed Circular 4/2004, of December 22, to credit institutions, on public and reserved financial information standards and financial statement models, with Circular 4/2017, of November 27, to credit institutions, on public and reserved financial information standards and financial statement models.

– Article 4 is modified to establish the minimum frequency with which entities and branches affiliated with the FGD must update, in the detailed register of deposits received regulated in Annex 2, the information relating to balances held by investment service companies in instrumental and transitional cash accounts opened at the entity or branch affiliated with the FGD, in the name of the investment service company on behalf of its clients.

– Annex 1, "Information to determine the calculation bases for contributions to the Deposit Guarantee Fund", is replaced by another Annex 1, of the same name, which will consist of two parts, A and B.

In the template of Part A, "Information relating to deposit and securities guarantee compartments", the information that entities affiliated with the FGD have been sending until the entry into force of this circular is maintained, and the necessary adjustments are made to collect information on deposits constituted by investment service companies in instrumental and transitional cash accounts opened in the name of the investment service company at the reporting entity on behalf of its clients, as established in Articles 30 quater and 43.3 of Royal Decree 217/2008. Furthermore, for admissible deposits, the detail is added between those captured by offices based in Spain ("Business in Spain") and those captured by branches in other countries of the European Union ("Business in branches in other EU Member States"). Finally, Part B is added to Annex 1 of Circular 8/2015, with a template that includes the breakdown by country of residence of the branches of admissible and guaranteed deposits.

– Annex 2, "Detailed register of deposits received", is modified to specify how the individualized balances of each client corresponding to instrumental and transitional cash accounts opened at the entity or branch affiliated with the FGD by investment service companies, in the name of these, but on behalf of their clients, as established in Articles 30 quater and 43.3 of Royal Decree 217/2008, should be collected in this register.

The circular will enter into force on June 30, 2021.

III

This circular attends to the principles of necessity, effectiveness, and legal certainty required by Article 129.1 of Law 39/2015, of October 1, on the common administrative procedure of Public Administrations (hereinafter, "Law 39/2015"), since it responds to the need to undertake changes that ensure the correct compliance with the obligations contained in Circular 8/2015 by entities and branches affiliated with the FGD and, therefore, the compliance, by the Bank of Spain, of the control and supervision function intended to ensure the proper functioning of the Deposit Guarantee Fund. The principles of proportionality and efficiency established in the aforementioned law are also attended to, since only those information requirements indispensable to comply with the changes in Royal Decree 217/2008, mentioned above, as well as the additional information requirements for entities and branches affiliated with the FGD, which ensure the correct compliance with the cooperation obligations of the FGD established at the European level and which derive from the current regulatory framework on this matter, are provided for.

The principle of transparency is achieved through the prior public consultation to potential affected parties, established by Article 133 of Law 39/2015, and the public hearing to interested parties, both forming part of the processing process of this circular. Both the consultation and the hearing have been carried out, during the drafting process of this circular, through its publication on the Bank of Spain website, and the opportunity has been given to the recipients of the norm, competent bodies, and interested parties in general to express their observations.

Royal Decree 2606/1996, in its first final provision, authorizes the Bank of Spain to develop the technical-accounting matters relating to the concepts of guaranteed deposits and securities. For its part, the Order of March 31, 1989 grants the Bank of Spain the faculty to establish and modify the accounting standards and financial statement models of credit institutions, including, specifically, the faculty to establish the reserved nature statements necessary for it to fulfill its control and inspection functions.

Consequently, in exercise of the faculties granted, the Board of Governors of the Bank of Spain, upon proposal of the Executive Commission, and in agreement with the Council of State, has approved this circular, which contains the following provision:

Single Provision. Modification of Circular 8/2015, of December 18, of the Bank of Spain, to entities and branches affiliated with the Deposit Guarantee Fund of Credit Institutions, regarding information to determine the calculation bases for contributions to the Deposit Guarantee Fund of Credit Institutions.

The following modifications are introduced in Circular 8/2015, of December 18 [1]:

a) In Article 3, "Valuation Criteria", the following modifications are made:

i) In paragraph a), "Circular of the Bank of Spain 4/2004, of December 22" is replaced by "Circular of the Bank of Spain 4/2017, of November 27".

ii) In paragraph b), "Circular of the Bank of Spain 4/2004" is replaced by "Circular of the Bank of Spain 4/2017".

b) Article 4, "Information on monetary deposits", is modified, which reads as follows:

"1. Entities and branches affiliated with the FGD must have available to the Bank of Spain, at all times, the "Detailed register of deposits received" established in Annex 2, with the specifications contained therein.

2. The information relating to deposits in the "Detailed register of deposits received" must be permanently updated, except for that corresponding to balances held by investment service companies in instrumental and transitional cash accounts opened at the entity or branch affiliated with the FGD in the name of the investment service company on behalf of its clients, which shall be updated at least quarterly or when requested by the Bank of Spain.

3. In addition to what is indicated in the previous paragraph, the individualized information of each of the clients comprising the balance held by investment service companies in instrumental and transitional cash accounts opened at the entity or branch affiliated with the FGD, in the name of the investment service company on behalf of its clients, must be available by all entities at the moment when any of the payment events indicated in Article 8.1 of Royal Decree-Law 16/2011, of October 14, by which the Deposit Guarantee Fund of Credit Institutions is created, occurs."

c) Annex 1, "Information to determine the calculation bases for contributions to the Deposit Guarantee Fund", is replaced by that appearing in the annex of this circular.

d) In Annex 2, "Detailed register of deposits received", the following modifications are made:

i) The third point on the general characteristics of the file is modified, which reads as follows:

"For each account or deposit, including funds resulting from transitional situations due to traffic operations as indicated in Article 4.1 of Royal Decree 2606/1996 and those resulting from balances held by investment service companies in instrumental and transitional cash accounts opened at the entity or branch affiliated with the reporting FGD, in the name of the investment service company on behalf of its clients, as established in Article 30 quater of Royal Decree 217/2008 (hereinafter, "deposits"), a record per owner and deposit will be included, with the following exceptions:

– In the case of multi-currency deposits, a record per owner, deposit, and currency will be reported.

– In the case of deposits that have mandates with different maturity dates, a record per owner, deposit, and mandate maturity date will be reported.

– In the case of balances held by investment service companies in instrumental and transitional cash accounts opened at the entity or branch affiliated with the FGD, in the name of the investment service company on behalf of its clients, whose deposits are not excluded from FGD coverage pursuant to paragraph 4 of Article 4 of Royal Decree 2606/1996, an individualized record will be included for each of these clients with their corresponding balance.

Consequently, there must be a unique record per "Type of identification document" (field 1), "Identification document number" (field 2), "Maturity date" (field 14) and "Code of the deposit registered in Spain or in a branch of another EU country" (field 15). These fields form the unique key of the record."

ii) The fourth point on the general characteristics of the file is modified, which reads as follows:

"The register will include deposits and funds of non-financial companies, households, and Local Administrations with an annual budget equal to or less than 500,000 euros, regardless of whether the deposits and funds are admissible or not for their coverage by the FGD. It will also include balances held by investment service companies in instrumental and transitional cash accounts opened at the entity or branch affiliated with the FGD in the name of the investment service company on behalf of its clients, whose deposits are not excluded from FGD coverage pursuant to paragraph 4 of Article 4 of Royal Decree 2606/1996, duly individualized for each of them."

iii) The description of field 11 is modified, which reads as follows:

"Field 11. Owner's email.

– Format: Alphanumeric.

– Length: 125.

– Content: Contact email (e-mail) of the depositor. The format must comply with the Internet RFC-822 standard. This field will always be filled in when the data is available. Otherwise, it will be filled with 125 blank spaces."

iv) The description of field 15 is modified, which reads as follows:

"Field 15. Code of the deposit registered in Spain or in a branch of another EU country.

– Format: Alphanumeric.

– Length: 39.

– Content: The field will be formed as follows:

− The first two positions will contain the characters "ES" for deposits registered in Spain, or the ISO 3166 alpha-2 code of the country where the branch is located for deposits in other EU countries.

− The next three positions will contain the ISO 4217 code of the deposit currency.

− The remaining 34 positions will contain the code assigned by the entity or branch affiliated with the FGD to the deposit. This code will be unique for each deposit held by investment service companies in instrumental and transitional cash accounts opened at the entity or branch affiliated with the FGD, in the name of the investment service company on behalf of its clients. Consequently, the code will be the same in each of the individualized records corresponding to the clients of the investment service company included in said deposit."

v) The description of field 16 is modified, which reads as follows:

"Field 16. Type of deposit.

– Format: Numeric.

– Length: 3.

– Content: Internal code that the entity or branch affiliated with the FGD assigns to the type of deposit in question. By way of example, codes could be assigned as follows: savings accounts (001), current accounts (002), etc. Balances held at the entity or branch affiliated with the FGD, by investment service companies in instrumental and transitional cash accounts on behalf of their clients, must be identified using a specific code."

vi) The description of field 17 is modified, which reads as follows:

"Field 17. Total number of owners.

– Format: Numeric.

– Length: 8.

– Content: Total number of deposit owners. It will always be a number greater than zero. In the case of balances held at the entity or branch affiliated with the FGD, by investment service companies in instrumental and transitional cash accounts on behalf of their clients, the number of clients will appear."

vii) The description of field 18 is modified, which reads as follows:

"Field 18. Owner number.

– Format: Numeric.

– Length: 8.

– Content: Order number corresponding to the owner in the total number of deposit owners."

viii) The description of field 19 is modified, which reads as follows:

"Field 19. Amount.

– Format: Alphanumeric.

– Length: 15.

– Content: Principal or nominal amount plus accrued interest on the date to which the deposit data refers. In the case of a deposit with more than one owner, the amount will be included in the part corresponding to each owner. In the case of balances held by investment service companies in instrumental and transitional cash accounts opened at the entity or branch affiliated with the FGD, in the name of the investment service company on behalf of its clients, whose deposits are not excluded from FGD coverage pursuant to paragraph 4 of Article 4 of Royal Decree 2606/1996, the amount will include the balance corresponding to each client.

The amount will be included with a sign and two decimals. The first position will always be "−" if the deposit balance is negative (overdrafts on current accounts) and the conditions established in Article 7.2 of Royal Decree 2606/1996 are met, or "+" if it is positive. The other 14 positions will be completed with zeros to the left and will contain the amount, which must be expressed in euro cents, the last two digits corresponding to the decimals of the amount, without including the decimal sign "," in any case. When the amount is zero, the first position will be "+" and the following 14 positions will be zeros.

Deposits not denominated in euros will be converted to euros:

– In the event of a payment event, deposits will be converted to euros applying the exchange rate of the day on which any of the events cited in Article 8.1 of Royal Decree 2606/1996 occurs, or of the previous business day if it were a holiday.

– In the rest of the cases, the exchange rate corresponding to the reference date of the data will be applied."

[1]

Texts incorporated into Circular 8/2015, of December 18.

Single Final Provision. Entry into force.

This circular will enter into force on June 30, 2021.

ANNEX

ANNEX 1

Information to determine the calculation bases for contributions to the Deposit Guarantee Fund

Part A: Information relating to deposit and securities guarantee compartments

Part B: Detail of admissible and guaranteed deposits by country

a) Number of owners with deposits or securities and other guaranteed financial instruments in units.

To reflect the number of owners of guaranteed deposits, what is indicated in Article 7, numbers 4 and 5, of Royal Decree 2606/1996 will be taken into account. In the case of balances held by investment service companies in instrumental and transitional cash accounts opened at the reporting entity or branch affiliated with the FGD, in the name of the investment service company on behalf of its clients, the number of clients of the investment service company will be counted as the number of owners, as specified in the general characteristics of the register of deposits received of Annex 2.

To reflect the number of owners of guaranteed securities and other financial instruments, what is indicated in Article 7 bis, numbers 3 and 4, of Royal Decree 2606/1996 will be taken into account.

b) The amount will be that resulting from applying the valuation criteria of Article 3 of the circular regulating this statement. The amount will be expressed in euro units.

c) The terms "deposits", "non-financial companies", "households", "SMEs", "large companies", "business in Spain" and, "business abroad" coincide with those included in Circular of the Bank of Spain 4/2017. The term "business in branches in other EU Member States" refers to deposits registered in the books of the entity's branches located in other Member States of the European Union.

d) Repurchase agreements (or temporary asset transfers) as defined in Circular of the Bank of Spain 4/2017, valued in accordance with what is indicated in letter (b) above.

e) Deposits –hybrid or structured– that, due to potentially having negative yields, do not have the status of deposits, for the purposes of Royal Decree 2606/1996, because their principal is not repayable at nominal value or only is with a guarantee or special agreement of the entity or a third party (Article 4.1 of Royal Decree 2606/1996).

f) Registered deposit certificates issued from July 2, 2014, as well as deposits other than those mentioned in the previous notes that must be entirely excluded from FGD coverage as provided in Article 4 of Royal Decree 2606/1996.

g) Funds, not registered as deposits, resulting from transitional situations due to traffic operations as indicated in Article 4.1 of Royal Decree 2606/1996 in the name of owners whose deposits are not excluded from FGD coverage pursuant to paragraph 4 of Article 4 of Royal Decree 2606/1996, corresponding to business in Spain and in branches in other EU Member States. It includes, in any case, monetary resources that have been entrusted to the entity for the performance of some investment service, in accordance with the consolidated text of the Securities Market Law, or that come from the provision by the entity of these investment services to said clients.

h) Deposits constituted by Local Administrations with a budget