Circular 1/2006 of the Bank of Spain, of February 24, modifying Circular 4/2001 regarding deposit guarantee fund contributions and guaranteed amounts

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Circular 1/2006, of February 24, of the Bank of Spain, modifying Circular 4/2001, of September 24, regarding information on balances that make up the calculation base for contributions to deposit guarantee funds, and the scope of guaranteed amounts. (BOE of 25)

The Bank of Spain Circular 4/2004, of December 22, to credit institutions, on public and reserved financial information standards and financial statement models, has repealed the Bank of Spain Circular 4/1991, of June 14, on accounting standards and financial statement models, and has modified the standards for the preparation of individual and consolidated annual accounts of credit institutions.

Royal Decree 2606/1996, of December 20, on deposit guarantee funds in credit institutions, develops the legal regime of deposit guarantee funds in banking establishments, savings banks, and credit cooperatives, and in its final provision first, authorizes the Bank of Spain to develop the technical-accounting issues related to the concept of deposits and relevant guaranteed securities for determining the scope of legal guarantees and for the calculation of the contributions that affiliated entities make annually to the respective funds.

Furthermore, the third final provision of Royal Decree 948/2001, of August 3, on investor compensation systems, empowers the Bank of Spain to determine the valuation criteria to be applied to different types of unlisted securities and financial instruments to be included in the calculation base for annual contributions to the Funds.

CBE 4/2001, of September 24, in its second rule, establishes the information to be provided to the Bank of Spain by affiliated entities and, in its third rule, the valuation criteria for calculating the base for contributions referred to in Article 3 of Royal Decree 2606/1996. In both cases, the rules are based on the accounting criteria and items of the financial statements established in Circular 4/1991, now repealed.

In view of the changes introduced by CBE 4/2004 in the valuation standards and presentation criteria for financial statements, it is necessary to modify CBE 4/2001, without thereby altering the calculation base for contributions or the scope of coverage.

To this end, this Circular modifies the third rule of Circular 4/2001, on valuation criteria, and the statement that entities must submit annually to the Bank of Spain, which appears in the annex.

Consequently, in exercise of the powers conferred in this matter and in accordance with what is established in Article 3 of Law 13/1994, of June 1, the Bank of Spain has ordered:

Single Rule.

The following modifications are introduced in Circular 4/2001, of September 24, to entities affiliated with a deposit guarantee fund, regarding information on balances that make up the calculation base for contributions to deposit guarantee funds, and the scope of guaranteed amounts:

1. In section 1 of the second rule, the reference to the "Office of Documentation and Risk Central" is replaced by the "Financial Information Department and Risk Central."

2. The following wording is given to the third rule:

"Third Rule. Valuation Criteria.-For the purpose of calculating the base for determining contributions to the Deposit Guarantee Fund referred to in Article 3 of Royal Decree 2606/1996, the valuation criteria that entities must apply shall be as follows:

a) Monetary deposits shall be valued using the same criteria with which they are recorded in the balance sheet, as provided for customer deposits in rule sixty-four of CBE 4/2004, of December 22, to credit institutions, on public and reserved financial information standards and financial statement models, without considering valuation adjustments.

When there is a difference between the value at which they are recorded in the reserved balance sheet, in accordance with the preceding paragraph, and their redemption value, with the latter being higher, such difference shall be included within the total amount of guaranteed deposits.

b) Guaranteed securities and other financial instruments shall be valued using the same criteria with which they are registered in the off-balance sheet accounts of the reserved balance sheet, in accordance with letters a), b), and e) of section 6 of rule sixty-five of CBE 4/2004."

3. The statement model collected in the annex is replaced by the model collected in this circular.

Transitional Provision.

For the formulation of the declaration corresponding to December 31, 2005, entities must use the statement model collected in the annex to this circular.

Entities must submit the aforementioned statement to the Bank of Spain before the forty-eight hours following the entry into force of this Circular.

Entry into force.-

This Circular shall enter into force on the day of its publication in the Official State Bulletin.

ANNEX-C-1-2006.PDF (30 KB)

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