Circular 1/2025 of the Bank of Spain, of 19 December, amending Circular 4/2017 on financial information standards and Circular 1/2013 on the Risk Information Central

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Circular 1/2025, of 19 December, of the Bank of Spain, amending Circular 4/2017, of 27 November, to credit institutions, on standards for public and reserved financial information and models of financial statements, and Circular 1/2013, of 24 May, on the Risk Information Central (BOE of 29 December 2025).

I

The main objective of this circular is to update Circular 4/2017, of 27 November, of the Bank of Spain, to credit institutions, on standards for public and reserved financial information and models of financial statements. Likewise, this circular updates Circular 1/2013, of 24 May, of the Bank of Spain, on the Risk Information Central.

First, this circular modifies Circular 4/2017, of 27 November, to maintain alignment with international financial reporting standards adopted in the European Union (IFRS-EU), subject to what is established in the Commercial Code, avoiding the application of different accounting criteria in individual and consolidated annual accounts.

Thus, to maintain alignment with IFRS-EU, the modifications that this circular incorporates into Circular 4/2017, of 27 November, reflect changes in IFRS-EU 9, Financial Instruments, made pursuant to:

– Commission Regulation (EU) 2025/1047 of 27 May 2025, amending Regulation (EU) 2023/1803 regarding International Financial Reporting Standard 9 and International Financial Reporting Standard 7.

– Commission Regulation (EU) 2025/1266 of 30 June 2025, amending Regulation (EU) 2023/1803 regarding International Financial Reporting Standard 9 and International Financial Reporting Standard 7.

– Commission Regulation (EU) 2025/1331 of 9 July 2025, amending Regulation (EU) 2023/1803 regarding International Financial Reporting Standards 1, 7, 9 and 10 and International Accounting Standard 7.

The accounting criteria contained in IFRS-EU 9, Financial Instruments, are fundamental for recording the usual activities of entities. This block of changes in IFRS-EU includes those derived from the revision of criteria for recognition (or derecognition) from the balance sheet and classification for the measurement of financial instruments, the annual improvements published in 2024, and contracts referenced to electricity obtained from natural sources.

The changes made to IFRS-EU 9, among others, affect the classification for measurement of financial assets that incorporate changes in contractual cash flows conditioned on the occurrence of events affecting the debtor. For example, this would be the case for certain loans in which interest payments are reduced if the debtor meets certain energy savings or emission reduction targets. The new criteria would allow such loans to be measured at amortized cost, or at fair value with changes in other comprehensive income, when, in all contractually possible scenarios, the contractual cash flows do not differ significantly from those that would be generated by an identical loan, but without the contingent condition described.

In addition, the modifications that this circular incorporates into Circular 4/2017, of 27 November, reflect changes in International Accounting Standards (IAS) 1, Presentation of Financial Statements, and 8, Accounting Policies, Changes in Accounting Estimates and Errors, pursuant to Commission Regulation (EU) 2022/357 of 2 March 2022, which amends Regulation (EC) No 1126/2008, adopting certain International Accounting Standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council, regarding International Accounting Standards 1 and 8. The aforementioned Regulation (EC) No 1126/2008 has been replaced by Regulation (EU) 2023/1803, which since its publication has been the legal instrument in which the text of IFRS-EU is consolidated. Likewise, this circular incorporates changes in IAS 7, Statement of Cash Flows, and IFRS 7, Financial Instruments: Disclosures, pursuant to Commission Regulation (EU) 2024/1317 of 15 May 2024, amending Regulation (EU) 2023/1803 regarding International Accounting Standard 7 and International Financial Reporting Standard 7.

This second block of changes to maintain alignment with IFRS-EU comprises, on the one hand, the inclusion of the definition of accounting estimates and the clarification that changes in valuation techniques, estimation methodologies, or variables used will be changes in accounting estimates, unless they are the consequence of correcting errors committed in previous periods. On the other hand, it involves the inclusion in the notes to the annual accounts of new information on credit received in programs for financing the entity's debts with its suppliers granted by other entities.

To complete the adaptation to the changes that have occurred in IFRS-EU, the modifications that this circular incorporates into Circular 4/2017, of 27 November, reflect changes made to IFRS-EU 12, Income Taxes, pursuant to Commission Regulation (EU) 2023/2468 of 8 November 2023, amending Regulation (EU) 2023/1803 regarding International Accounting Standard 12.

These changes in IFRS-EU 12 introduce an exception to the recognition of assets and liabilities for deferred taxes derived from the global minimum tax level promoted by the Organisation for Economic Co-operation and Development (OECD). This modification of Circular 4/2017, of 27 November, is aligned with the one made for the same reason in the General Accounting Plan, by Law 7/2024, of 20 December, establishing a Complementary Tax to guarantee a global minimum tax level for multinational groups and large-scale national groups, a Tax on the interest and commission margin of certain financial entities, and a Tax on liquids for electronic cigarettes and other related products, and amending other tax regulations.

Second, the modifications that this circular makes to Circular 4/2017, of 27 November, incorporate the results of the review of requirements related to credit risk coverage due to country risk.

Appendix 9 of Circular 4/2017, of 27 November, establishes that, in the case of certain operations with non-resident holders, it is necessary to reflect the country risk component in the estimation of the credit risk loss coverage. The country risk component covers sovereign risk, transfer risk (inability of a holder to meet its debts due to lack of foreign currency), and other international activity risks (such as those resulting from wars or natural disasters).

It is appropriate to review the requirements related to credit risk coverage due to country risk because geopolitical risk and country risk partially overlap for some risk factors, and recently, the consideration of geopolitical risk has gained special relevance in the estimation of credit risk coverage. One of the purposes of this review is to facilitate that entities that estimate their collective credit risk coverage with internal methodologies classify operations without having to adhere to the pre-established country risk groups in the circular. Similarly, it is intended to avoid that entities have to develop methodologies independent of their general credit risk coverage estimation methodologies for the separate estimation of the country risk component. As there are entities that resort to them, Circular 4/2017, of 27 November, continues to offer alternative solutions for the collective estimation of the country risk component.

Third, this circular introduces other minor modifications to incorporate the clarifications and necessary corrections identified in the time elapsed since the last modification of Circular 4/2017, of 27 November. Specifically, the definition of certain products, such as advances other than loans and renewable loans, is revised; certain normative references that have become obsolete are updated; clarifications are included on the interaction between the measurement criteria for financial instruments and those for non-current assets held for sale; and in Appendix 9, the treatment of refinancing agreements under the special regime at the date they are granted is suppressed, as these special restructuring agreements are no longer regulated by the consolidated text of the Bankruptcy Law.

Fourth, changes are introduced in the reserved financial statements to add or suppress certain information.

The Bank of Spain is one of the main drivers of the simplification movement, one of whose focuses is the rationalization of the information that entities send to financial authorities. In this line, with this circular, a pioneering process is initiated, aimed at replacing certain reserved statements with granular information from the Risk Information Central (CIR) and from the complementary financial statements to the declarations to the CIR.

The first step of this journey is the replacement of the financial information required in certain reserved financial statements on credit risk coverage (FI 131) and real estate assets and equity instruments adjudicated or received in payment of debt (FI 141) with granular information reported to the CIR. For this, it is necessary to introduce minimal changes in the granular information declared to the CIR and in the financial statement with granular information on adjudicated assets (FI 142). The objective is to achieve that the granular information declared by entities reaches a quality sufficiently adequate to allow that, as this circular establishes, the last submission by entities of these financial statements on credit risk coverage and real estate assets and equity instruments adjudicated or received in payment of debt is the one corresponding to 30 June 2026.

On the one hand, to comply with multiple statistical requirements of international bodies, the information requested in the reserved individual, monthly, and quarterly financial statements regarding derivatives operations is modified, to include the declaration of gross market value balances without netting between asset and liability positions and the corresponding amount of collateral used in such operations. In addition, the monthly and quarterly reporting of operations contracted on behalf of third parties is eliminated. In the quarterly report, the reporting threshold has been increased from ten million euros to five hundred million euros.

On the other hand, the reserved statements of the Economic and Monetary Union (EMU) have been modified to adapt them to European Central Bank Regulation (EU) 2021/379 of 22 January 2021, on the balance sheet items of credit institutions and the monetary financial institutions sector.

Regarding the information required on dependent companies and joint ventures, the complementary information on dependent financial entities and joint ventures is expanded to cover existing gaps and to adequately comply with European Parliament and Council Regulation (EU) 2019/2152 of 27 November 2019, on European business statistics repealing ten legal acts in the field of business statistics, and its Implementing Regulation (EU) 2020/1197 of the Commission of 30 July 2020, establishing technical specifications and modalities in accordance with Regulation (EU) 2019/2152 of the European Parliament and of the Council on European business statistics repealing ten legal acts in the field of business statistics.

Finally, other minor modifications are introduced, generally in the notes of the reserved statements, to incorporate the clarifications and necessary corrections identified since the last modification of Circular 4/2017, of 27 November.

II

This circular consists of two regulations, three transitional provisions, one final provision, and an appendix.

Regulation 1 updates Circular 4/2017, of 27 November, as follows:

– In Regulation 18, "Correction of errors and changes in accounting estimates", first, the definition of accounting estimates is incorporated. Second, a paragraph is introduced to explain that changes in valuation techniques, estimation methodologies, or variables used will be changes in accounting estimates.

– Regulation 19, "Definition of financial instruments", is modified to incorporate the definition of contracts referenced to electricity obtained from natural sources. These contracts include contracts to buy or sell electricity obtained from natural sources and financial instruments that have such electricity as the underlying asset. In addition, a paragraph is introduced to reflect that the entity will be understood to maintain such contracts for the purpose of receiving electricity according to its usage needs when it has been, and expects to continue being, a net buyer of electricity.

– In Regulation 22, "Recognition, classification and measurement of financial instruments", first, a paragraph is introduced to give entities the option to derecognize a financial liability from the date the payment order is initiated (instead of the settlement date) when it is made in cash using an electronic payment system, as well as to establish the requirements for exercising this option. Second, the necessary changes are made to establish that the analysis, for the purposes of classification for measurement, of financial assets with contractual cash flows conditioned on the occurrence of events affecting the debtor (such as certain loans in which interest payments are reduced if the debtor reaches certain energy savings or emission reduction targets) must be performed by comparing the cash flows that could be generated before and after the occurrence of the event, and that their contractual cash flows will be consistent with payments linked to the basic costs and risks of a credit operation when, in all possible scenarios, these cash flows do not differ significantly from those that would be generated by an identical loan, but without the contingent condition described. Third, likewise for the purposes of classification for measurement, the necessary changes are made to clarify the cases in which instruments issued in structures with multiple instruments forming tranches with an order of priority in collections (for example, securitizations) or instruments that are repaid with the cash flows generated by specific assets (for example, project financing loans) have contractual cash flows that are consistent with payments linked to the basic costs and risks of a credit operation. Fourth, it is specified that the determination of the transaction price for the initial recognition of trade receivables will be carried out in accordance with what is established in Regulation 15, "Revenue Recognition".

– In Regulation 31, "Accounting hedges", first, a new letter is introduced to allow the designation of contracts referenced to electricity obtained from natural sources as hedging instruments. Second, the necessary changes are introduced to allow the designation as hedged items of anticipated transactions with electricity and of a variable component of the nominal amount of such transactions.

– Regulation 34, "Non-current assets held for sale and discontinued operations", is modified to expressly clarify that the specific measurement criteria for non-current assets held for sale apply to investments in subsidiaries, joint ventures, and associates classified in this category.

– Regulation 42, "Income tax", is modified to incorporate an exception, of mandatory application, to the recognition of assets and liabilities for deferred taxes derived from the complementary tax to guarantee a global minimum tax level for multinational groups and large-scale national groups.

– Regulation 52, "Asset", is modified to define "Advances other than loans".

– Regulation 59, "Criteria for preparing the notes", is modified to specify that the notes will provide a summary of the accounting criteria that influence the understanding of the annual accounts.

– Regulation 60, "Notes to individual annual accounts", is modified to require that additional information be included. The new information requested concerns financial assets whose contractual cash flows are conditioned on the occurrence of events affecting the debtor, gains or losses on investments in equity instruments at fair value with changes in other comprehensive income, contracts referenced to electricity obtained from natural sources, credit received in programs for financing the entity's debts with its suppliers, and expense or income for current taxes derived from the complementary tax to guarantee a global minimum tax level for multinational groups and large-scale national groups.

– In Regulation 67, "Reserved individual statements", and in Regulation 68, "Reserved consolidated statements", the normative references that have become obsolete are updated.

– In addition, in Regulation 67, "Reserved individual statements", first, statements FI 131 and FI 141 are suppressed. Second, the denomination and content of statements FI 105 and FI 136, which collect derivatives operations, are updated, and the threshold for the presentation of statement FI 136 is considerably increased, from ten million euros to five hundred million euros.

– Regulation 69, "Reserved statements relating to the statistical requirements of the Economic and Monetary Union", is modified to change the definition of renewable loans, in order to improve its adaptation to the regulations of the European Central Bank, origin of these requirements.

– In Appendix 4, "Reserved individual statements", first, statements FI 131 and FI 141 and the breakdowns of both statements are suppressed. Likewise, the denominations of statements FI 105 and FI 136 in the index are modified and replaced by those appearing in the appendix of this circular. Third, the information on operations contracted on behalf of third parties from statements FI 105-2 and FI 136-2 is suppressed. Fourth, statement FI 142-1.1 is replaced by the one appearing in the appendix of this circular. Finally, specific modifications are incorporated in the notes of statements FI 130, FI 139, and FI 140 with the aim of including clarifications identified as necessary since the previous modification of Circular 4/2017, of 27 November.

– In Appendix 5, "Reserved consolidated statements", first, statement FC 203 is replaced by the one appearing in the appendix of this circular. Second, specific modifications are incorporated in the notes of statement FC 140.

– In Appendix 6, "Reserved statements relating to the statistical requirements of the Economic and Monetary Union", the subsector of credit institutions subject to minimum reserve requirements that are not MFIs is added, in statements EMU 2 and EMU 9, and the notes of EMU 11.3 are modified.

– Regarding Appendix 9, "Analysis and credit risk coverage", first, the references to letter c) of point 11 that have become obsolete are modified. Second, the references to statement F 131 which is eliminated are suppressed. Third, the treatment of refinancing agreements under the special regime at the date they are granted ("special debt sustainability agreements", in the terminology of the appendix) is suppressed. Fourth, the requirements related to credit risk coverage due to country risk are reviewed.

Regulation 2 modifies Circular 1/2013, of 24 May, to incorporate the dimensions and values necessary to replace statement FI 131 with the granular information of the CIR. Specifically:

– In module H.1 of Appendix 1, "Data modules", the dimension "Amount of risk not covered with real guarantees after discounts" is added.

– In Appendix 2, "Instructions for preparing the data modules", within module H.1, new values are introduced for the dimension "Method for assessing impairment" and the dimension "Amount of risk not covered with real guarantees after discounts" is added.

Following what is established for the first application of the changes in IFRS-EU 9 made by Commission Regulation (EU) 2025/1266, the first transitional provision establishes that, in the annual accounts of the 2026 fiscal year, entities will apply retroactively the modifications, relating to contracts referenced to electricity obtained from natural sources, introduced by this circular in regulations 19, 31, and 60 of Circular 4/2017, of 27 November. However, among other exceptions, entities may opt not to restate the comparative information included in the annual accounts of the 2026 fiscal year and must apply the modifications prospectively to new hedging relationships designated from 1 January 2026.

Following what is established for the first application of the changes in IFRS-EU 9 made by Commission Regulation (EU) 2025/1047, the second transitional provision establishes that, in the annual accounts of the 2026 fiscal year, entities will apply retroactively the modifications, relating to the classification for measurement of financial assets, introduced by this circular in regulations 22 and 60 of Circular 4/2017, of 27 November. However, among other exceptions, entities may opt not to restate the comparative information included in the annual accounts of the 2026 fiscal year.

The third transitional provision establishes that the last data that credit institutions must report for statements FI 131, "Credit risk coverage", and FI 141, "Real estate assets and equity instruments adjudicated or received in payment of debts", are those corresponding to 30 June 2026.

According to what is established in the sole final provision