Law 9/2012 of 14 November on the Restructuring and Resolution of Credit Institutions

Law 9/2012, of 14 November, on the Restructuring and Resolution of Credit Institutions.

Head of State "BOE" No. 275, of 15 November 2012 Reference: BOE-A-2012-14062

INDEX

Preamble ................................................................ 8 CHAPTER I. General Provisions ............................................... 13 Article 1. Purpose. ....................................................... 13 Article 2. Definitions. .................................................... 13 Article 3. Objectives of restructuring and resolution. ............................... 14 Article 4. Principles of restructuring and resolution. ............................... 14 Article 5. Valuation. ..................................................... 15 CHAPTER II. Early Intervention .................................................. 15 Article 6. Conditions for early intervention................................... 15 Article 7. Action Plan. .................................................... 15 Article 8. Content of the action plan. ....................................... 16 Article 9. Early intervention measures. ....................................... 16 Article 10. Provisional replacement of the administrative body as an early intervention measure. 17 Article 11. Monitoring of the action plan and information to the Bank Restructuring and Resolution Fund. ........................................................... 17 Article 12. Termination of the early intervention situation. .......................... 18 CHAPTER III. Restructuring ................................................... 18 Article 13. Conditions for restructuring. ................................... 18 Article 14. Restructuring Plan. ........................................... 18 CONSOLIDATED LEGISLATION Page 1

Article 15. Restructuring instruments....................................... 19 Article 16. Content of the restructuring plan. .................................. 19 Article 17. Monitoring of the restructuring plan and information to the Bank Restructuring and Resolution Fund. .................................................... 19 Article 18. Termination of the restructuring process. .............................. 20 CHAPTER IV. Resolution ....................................................... 20 Section 1. Resolution Frameworks ............................................. 20 Article 19. Conditions for resolution. ....................................... 20 Article 20 Concept of unviable entity.......................................... 20 Section 2. Resolution Procedure ............................................ 21 Article 21. Opening of the resolution process. .................................... 21 Article 22. Replacement of the administrative body as a resolution measure. .............. 21 Article 23. Resolution Plan. ............................................... 21 Article 24. Preliminary measures. ............................................. 22 Section 3. Specific Resolution Instruments ..................................... 23 Article 25. Resolution instruments. ......................................... 23 Article 26. Sale of the entity's business........................................ 23 Article 27. Bridge bank. .................................................. 24 CHAPTER V. Financial Support Instruments ......................................... 24 Article 28. Financial support instruments. ..................................... 24 Article 29. Recapitalization instruments. ...................................... 25 Article 30. Economic value of the entity and payment of recapitalization instruments. ......... 26 Article 31. Ordinary shares or capital contributions. .......................... 26 Article 32. Instruments convertible into ordinary shares or capital contributions. ....... 27 Article 33. Special regime for the subscription or acquisition by the FROB of recapitalization instruments. ..................................................... 27 Article 34. Conversion and divestment of instruments convertible into ordinary shares or capital contributions. .............................................. 28 CHAPTER VI. Asset Management Company .......................................... 28 Article 35. Asset Management Company. ....................................... 28 Article 36. Regime for the transfer of assets. ................................... 29 Article 37. Sanctioning regime for the asset management company and provisional replacement of the administrative body.................................................. 30 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 2

Article 38. Supervision regime for asset management companies. ................. 32 CHAPTER VII. Management of Hybrid Instruments ........................................ 32 Section 1. Management Shares for Hybrid Capital and Subordinated Debt Instruments........... 32 Article 39. Management Shares for Hybrid Capital and Subordinated Debt Instruments. ....... 32 Article 40. Types of management shares for hybrid capital and subordinated debt instruments. 33 Article 41. Market value................................................. 33 Article 42. Publication of management shares for hybrid capital and subordinated debt instruments. ......................................................... 33 Section 2. Management of Hybrid Capital and Subordinated Debt Instruments by the Bank Restructuring and Resolution Fund........................................... 34 Article 43. Management of hybrid capital and subordinated debt instruments by the Bank Restructuring and Resolution Fund. ......................................... 34 Article 44. Content of the management shares for hybrid capital and subordinated debt instruments agreed by the FROB............................................ 34 Article 45. Valuation criteria. ............................................ 35 Article 46. Approval of the management share for hybrid capital and subordinated debt instruments. ......................................................... 35 Article 47. Publication and effective date of the FROB agreement. ......................... 35 Article 48. Modification of a management share for hybrid capital and subordinated debt instruments. ......................................................... 36 Article 49. Rights of investors affected by a management share for hybrid capital and subordinated debt instruments. ........................................... 36 Article 50. Rights of third parties. ............................................. 36 Article 51. Sanctioning regime. ............................................. 37 CHAPTER VIII. Bank Restructuring and Resolution Fund ............................... 37 Section 1. Nature and Legal Regime ............................................ 37 Article 52. Bank Restructuring and Resolution Fund. ............................ 37 Article 53. Financing. ................................................... 38 Article 54. Government of the Bank Restructuring and Resolution Fund..................... 38 Article 55. Director General of the Bank Restructuring and Resolution Fund. ............... 39 Article 56. Parliamentary control. ............................................. 39 Article 57. Cooperation and coordination with other competent national authorities. .......... 40 Article 58. Cooperation and coordination with other competent international authorities. ....... 40 Article 59. Duty of secrecy. ................................................ 41 Article 60. Application of competition rules. ............................... 41 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 3

Article 61. Adoption of international recommendations. ............................. 41 Section 2. Powers of the Bank Restructuring and Resolution Fund ...................... 42 Article 62. Powers of the Bank Restructuring and Resolution Fund. .................. 42 Article 63. Commercial powers. ............................................ 42 Article 64. General administrative powers. ................................... 42 Article 65. Executive nature of measures. ..................................... 43 Article 66. Other applicable conditions. ........................................ 43 Article 67. Conditions applicable to financial operations and contractual compensation agreements. .......................................................... 43 Article 68. Urgency measures. ............................................. 44 Article 69. Publication. .................................................... 44 Article 70. Powers to suspend contracts and guarantees. .......................... 45 CHAPTER IX. Procedural Regime .................................................. 45 Article 71. Appeal against decisions and agreements of the Bank Restructuring and Resolution Fund adopted in accordance with Article 63 of this Law. ............................ 45 Article 72. Special features of the appeal against decisions and administrative acts issued in the framework of early intervention, restructuring, and resolution processes. .................. 46 Article 73. Special features of the appeal against decisions and administrative acts issued in matters of management of hybrid capital and subordinated debt instruments. .............. 46 Article 74. Impossibility of execution of judgment issued in the administrative appeals referred to in Articles 72 and 73 of this Law. ....................... 46 Additional Provisions ...................................................... 47 First Additional Provision. Endowment of the FROB. .................................. 47 Second Additional Provision. Advance payments from the Bank Restructuring and Resolution Fund to the Public Treasury. ................................................ 47 Third Additional Provision. Constitution and regime of the actions of the Delegated Intervention of the General Intervention of the State Administration in the FROB. ................... 47 Fourth Additional Provision. Tax benefits in the Tax on Property Transfers and Documented Legal Acts for FROB operations. .......................... 47 Fifth Additional Provision. Effects of early intervention, restructuring, and resolution processes on the continuity of credit institutions' activities. ............... 47 Sixth Additional Provision. Legal regime for the granting of guarantees to secure the economic obligations enforceable against the Bank Restructuring and Resolution Fund. .......... 48 Seventh Additional Provision. Creation of the Asset Management Company for Assets from Bank Restructuring. ................................................ 49 Eighth Additional Provision. Assets to be transferred to the Asset Management Company for Assets from Bank Restructuring. .............................................. 51 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 4

Ninth Additional Provision. Entities obliged to transfer Assets to the Asset Management Company for Assets from Bank Restructuring................................ 51 Tenth Additional Provision. Separate estates. ................................ 51 Eleventh Additional Provision. Consequences of losses incurred by credit institutions controlled by the FROB in relation to their net equity....................... 52 Twelfth Additional Provision. Contracting by the emergency procedure in the FROB. ......... 53 Thirteenth Additional Provision. Retail marketing of preferred shares, convertible debt instruments, and subordinated financings countable as own funds. .................................... 53 Fourteenth Additional Provision. References to Royal Decree-Law 9/2009, of 26 June, on bank restructuring and strengthening of own funds of credit institutions. ..... 53 Fifteenth Additional Provision. Special regime for the transformation of securitization management companies into FAB management companies. ................................... 53 Sixteenth Additional Provision. Granting of an extraordinary credit in the Budget of the Ministry of Economy and Competitiveness........................................ 53 Seventeenth Additional Provision. Tax regime of the Bank Asset Funds and their participants. ........................................................... 54 Eighteenth Additional Provision. Personnel costs and the Monitoring Commission of the Asset Management Company for Assets from Bank Restructuring. ..................... 54 Nineteenth Additional Provision. Report on the remuneration of credit institutions in restructuring or resolution processes. ....................................... 55 Twentieth Additional Provision. Modification of Royal Legislative Decree 1/2010, of 2 July, approving the Consolidated Text of the Capital Companies Law. ................... 55 Twenty-first Additional Provision. Tax regime of the Asset Management Company for Assets from Bank Restructuring. .................................... 55 Twenty-second Additional Provision. Executive claims initiated by the Asset Management Company for Assets from Bank Restructuring, S.A. (SAREB). ..................... 56 Transitory Provisions ...................................................... 56 First Transitory Provision. Ongoing restructuring processes. ..................... 56 Second Transitory Provision. Ongoing sanctioning and authorization procedures. ........ 56 Third Transitory Provision. Financial supports received. ............................ 56 Fourth Transitory Provision. General viability plan. .............................. 57 Fifth Transitory Provision. Regime for the contribution of assets of Law 8/2012, of 30 October, on the soundness and sale of real estate assets of the financial sector. ................ 57 Sixth Transitory Provision. Core capital requirements until 31 December 2012...... 57 Repealing Provisions ..................................................... 57 Repealing Provision. ................................................... 57 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 5

Final Provisions ......................................................... 57 First Final Provision. Modification of Law 13/1985, of 25 May, on Investment Coefficients, Own Funds and Information Obligations of Financial Intermediaries............. 57 Second Final Provision. Modification of Royal Legislative Decree 1298/1986, of 28 June, on Adaptation of Current Law in Matters of Credit Institutions to that of the European Communities. ........................................................... 58 Third Final Provision. Modification of Law 24/1988, of 28 July, on the Securities Market. ..... 58 Fourth Final Provision. Modification of Law 26/1988, of 29 July, on Discipline and Intervention of Credit Institutions. ............................................... 61 Fifth Final Provision. Modification of Law 29/1998, of 13 July, regulating the Contentious-Administrative Jurisdiction. ............................................... 63 Sixth Final Provision. Modification of Law 22/2003, of 9 July, Bankruptcy. ............... 63 Seventh Final Provision. Modification of Royal Decree-Law 2/2011, of 18 February, for the strengthening of the financial system........................................... 63 Eighth Final Provision. Modification of Royal Decree-Law 16/2011, of 14 October, creating the Deposit Guarantee Fund for Credit Institutions. ....................... 66 Ninth Final Provision. Modification of Royal Decree-Law 2/2012, of 3 February, on the soundness of the financial sector. .................................................... 67 Tenth Final Provision. Modification of Law 2/2012, of 29 June, on the General State Budgets for the year 2012. ................................................. 67 Eleventh Final Provision. Modification of Royal Decree-Law 21/2012, of 13 July, on liquidity measures for Public Administrations and in the financial sphere. ...................... 68 Twelfth Final Provision. Modification of Law 41/1999, of 12 November, on payment systems and securities settlement. ........................................... 68 Thirteenth Final Provision. Modification of Royal Decree-Law 11/2010, of 9 July, on governing bodies and other aspects of the legal regime of Savings Banks. .................. 69 Fourteenth Final Provision. Modification of Law 44/2002, of 22 November, on measures for the reform of the financial system............................................... 70 Fifteenth Final Provision. Modification of the consolidated text of the Law on the Tax on Property Transfers and Documented Legal Acts, approved by Royal Legislative Decree 1/1993, of 24 September. ....................................... 71 Sixteenth Final Provision. Modification of the consolidated text of the Law regulating Local Treasuries, approved by Royal Legislative Decree 2/2004, of 5 March. .................. 72 Seventeenth Final Provision. Modification of Royal Legislative Decree 4/2004, of 5 March, approving the consolidated text of the Corporate Income Tax Law................ 72 Eighteenth Final Provision. Legal regime applicable to guarantees constituted in favor of the Bank Restructuring and Resolution Fund and the Deposit Guarantee Fund for Credit Institutions. ............................................................ 72 Nineteenth Final Provision. Competence Titles................................ 72 Twentieth Final Provision. Development Power. ................................... 73 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 6

Twenty-first Final Provision. Termination of the validity of Chapter VII. ................ 73 Twenty-second Final Provision. Entry into force.................................. 73 OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION Page 7

CONSOLIDATED TEXT Last modification: 19 January 2022 Repealed norm, except for the modifying provisions of other norms and additional provisions 2, 3, 4, 6 to 12, 15, 17, 18 and 21, by the single repealing provision of Law 11/2015, of 18 June. Ref. BOE-A-2015-6789. and the single repealing provision.h) of Royal Legislative Decree 4/2015, of 23 October. Ref. BOE-A-2015-11435.

JUAN CARLOS I 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 According to the already classic definition contained in Article 1 of Royal Legislative Decree 1298/1986, of 28 June, on Adaptation of Current Law in Matters of Credit Institutions to that of the European Communities, the peculiar nature of these credit institutions derives from their form of liability capture, consisting in "receiving funds from the public in the form of deposit, loan, temporary transfer of financial assets or other analogous ones that carry the obligation of their restitution". The application of said liabilities "for their own account to the granting of credits or operations of analogous nature" is the other side of the coin of their financial intermediation labor, but it is not exclusive to credit institutions, despite the denomination proper to them. On the other hand, credit institutions play a key role in the economy, insofar as they facilitate the circulation of credit to the rest of productive activity sectors and to citizens. This aspect, added to the complexity of the financial system and the fact that some entities considered individually have systemic importance due to their size and the relationships they maintain within the sector, requires having efficient and flexible procedures, which allow guaranteeing the stability of the financial system, with the lowest possible cost for society as a whole. These peculiarities of credit institutions require that any measure of supervision or regulation of them be aimed above all at giving security to the public from which the entity captures its liability, and therefore to preserve the stability of the financial system. In turn, these needs justify that certain situations of temporary unviability of credit institutions must be overcome through the injection of public funds. The main purpose of these injections is the safeguarding of savings and deposits of all those clients who, otherwise, in case these supports were lacking and it were necessary to proceed without more to the liquidation of the credit institution, could lose a significant part of their wealth. Once the need for public financial supports in certain cases is admitted, it is necessary that the legislation intended to regulate them maintains the necessary balance between the protection of the credit institution's client and that of the taxpayer, minimizing the cost that the latter must assume in order to safeguard the former, without forgetting that in most cases citizens coincide in both conditions. The greatest balance is achieved when the injected public funds can be recovered within a reasonable period through the benefits generated by the supported entity. For all the aforementioned reasons, the public powers must provide a decided, although balanced, support to the viability of credit institutions, and must regulate the form and cases in which such support occurs, which necessarily implies a modulation of the principles of universality and "pars conditio creditorum" that govern insolvency procedures. There are numerous occasions in which certain temporary weaknesses of credit institutions can be overcome through the injection of public funds, thus avoiding the liquidation of the entity and the mere division of the asset between the liability and the proportional assumption of losses among all creditors. These are the cases of restructuring of credit institutions. There are also other occasions in which the definitive unviability of credit institutions should not be resolved simply through the aforementioned division, but it is advisable to previously segregate the healthy parts of the entity, and even the most disadvantaged ones, in order for the application of the insolvency procedure to be effective.

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CHAPTER I General Provisions

Article 1. Purpose.

1. This Law regulates the early intervention, restructuring, and resolution of credit institutions, as well as the financial support instruments and the Bank Restructuring and Resolution Fund (Fondo de Reestructuración Ordenada Bancaria), hereinafter referred to as the Fund.
2. The purpose of this Law is to establish a framework for the orderly resolution of credit institutions in case of failure, to avoid significant adverse effects on the financial system and the real economy, and to protect public funds.

Article 2. Definitions. For the purposes of this Law, the following definitions shall apply: a) Credit institution: any entity whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account. b) Early intervention: the set of measures adopted by the Bank of Spain or the Fund to prevent the deterioration of the financial situation of a credit institution. c) Restructuring: the set of measures adopted by the Fund to restore the viability of a credit institution that is in difficulty but not yet unviable. d) Resolution: the set of measures adopted by the Fund when a credit institution is unviable, to ensure the continuity of its critical functions, protect public funds, and minimize costs. e) Unviable entity: a credit institution that meets the conditions established in Article 20 of this Law. f) Fund: the Bank Restructuring and Resolution Fund. g) Resolution plan: the document prepared by the Fund for each significant credit institution, detailing the measures to be taken in case of resolution. h) Restructuring plan: the document prepared by the Fund for a credit institution in restructuring, detailing the measures to be taken to restore its viability. i) Bridge bank: a credit institution created by the Fund to take over the assets, liabilities, or parts of the business of an unviable credit institution. j) Asset sale instrument: the instrument by which the Fund transfers the assets, liabilities, or parts of the business of an unviable credit institution to a purchaser. k) Separation instrument: the instrument by which the Fund transfers the impaired assets or liabilities of an unviable credit institution to an asset management company. l) Bail-in instrument: the instrument by which the Fund writes down or converts the capital instruments and eligible liabilities of an unviable credit institution to absorb losses and recapitalize the institution. m) Financial support instrument: any instrument used by the Fund to provide financial support to a credit institution. n) Hybrid instrument: any instrument that combines features of equity and debt, such as preferred shares, convertible debt, or subordinated debt. o) Asset Management Company: the company created to manage the assets transferred from credit institutions in restructuring or resolution.

Article 3. Objectives of restructuring and resolution. The objectives of restructuring and resolution are: a) To ensure the continuity of critical functions. b) To avoid significant adverse effects on the financial system, including contagion. c) To protect public funds by minimizing the cost of failure. d) To protect depositors and investors. e) To ensure the efficient allocation of capital.

Article 4. Principles of restructuring and resolution.

1. The measures adopted in restructuring and resolution shall respect the following principles: a) No creditor shall incur greater losses than they would have incurred if the credit institution had been liquidated under normal insolvency proceedings (the "no creditor worse off" principle). b) Shareholders shall bear the first losses. c) Subordinated creditors shall bear losses before senior creditors. d) Management shall be replaced if necessary.
2. The Fund shall act in the public interest and shall be independent in the exercise of its functions.

Article 5. Valuation.

1. Before adopting any resolution or restructuring measure, the Fund shall obtain a valuation of the assets and liabilities of the credit institution.
2. The valuation shall be performed by an independent person.
3. The valuation shall determine the economic value of the entity and the amount of losses to be absorbed.

CHAPTER II Early Intervention

Article 6. Conditions for early intervention.

1. The Bank of Spain may adopt early intervention measures when a credit institution: a) Breaches or is likely to breach the prudential requirements. b) Has a negative net worth. c) Is likely to become unviable.
2. The Bank of Spain shall notify the Fund of the adoption of early intervention measures.

Article 7. Action Plan.

1. The Bank of Spain shall prepare an action plan for the credit institution.
2. The action plan shall include measures to restore the financial situation of the institution.
3. The action plan shall be submitted to the Fund for information.

Article 8. Content of the action plan. The action plan shall include: a) The causes of the deterioration of the financial situation. b) The measures to be adopted to restore viability. c) The timeline for the implementation of the measures. d) The resources required.

Article 9. Early intervention measures. The Bank of Spain may adopt the following early intervention measures: a) Require the credit institution to increase its capital. b) Require the credit institution to reduce its risk profile. c) Require the credit institution to submit a restructuring plan. d) Replace the administrative body. e) Suspend the payment of dividends. f) Limit the remuneration of executives.

Article 10. Provisional replacement of the administrative body as an early intervention measure.

1. The Bank of Spain may provisionally replace the administrative body of a credit institution if: a) The body has committed serious irregularities. b) The body is unable to perform its functions. c) The body has failed to adopt necessary measures to restore viability.
2. The provisional replacement shall be for a maximum period of six months, renewable once.

Article 11. Monitoring of the action plan and information to the Bank Restructuring and Resolution Fund.

1. The Bank of Spain shall monitor the implementation of the action plan.
2. The Bank of Spain shall inform the Fund of the progress of the action plan.
3. If the action plan is not implemented or is ineffective, the Bank of Spain shall notify the Fund to consider resolution measures.

Article 12. Termination of the early intervention situation. The early intervention situation shall terminate when: a) The credit institution has restored its viability. b) The credit institution is resolved. c) The Bank of Spain decides to terminate the early intervention measures.

CHAPTER III Restructuring

Article 13. Conditions for restructuring.

1. The Fund may adopt restructuring measures when a credit institution: a) Is in difficulty. b) Is likely to become unviable. c) Has no reasonable prospect of restoring its viability through market forces or early intervention measures. d) Restructuring is necessary in the public interest.
2. The Fund shall obtain a valuation before adopting restructuring measures.

Article 14. Restructuring Plan.

1. The Fund shall prepare a restructuring plan for the credit institution.
2. The restructuring plan shall detail the measures to be taken to restore viability.
3. The restructuring plan shall be approved by the Council of Ministers.

Article 15. Restructuring instruments. The Fund may use the following restructuring instruments: a) Capital injection. b) Asset purchase. c) Liability assumption. d) Bridge bank. e) Asset separation.

Article 16. Content of the restructuring plan. The restructuring plan shall include: a) The measures to be adopted. b) The financial support required. c) The timeline for implementation. d) The expected impact on the financial system.

Article 17. Monitoring of the restructuring plan and information to the Bank Restructuring and Resolution Fund.

1. The Fund shall monitor the implementation of the restructuring plan.
2. The Fund shall inform the Council of Ministers of the progress of the plan.
3. If the plan is not implemented or is ineffective, the Fund may consider resolution measures.

Article 18. Termination of the restructuring process. The restructuring process shall terminate when: a) The credit institution has restored its viability. b) The credit institution is resolved. c) The Fund decides to terminate the restructuring measures.

CHAPTER IV Resolution

Section 1. Resolution Frameworks

Article 19. Conditions for resolution.

1. The Fund may adopt resolution measures when a credit institution: a) Is unviable. b) There is no reasonable prospect that any other action, including early intervention measures, would prevent its unviability within a reasonable timeframe. c) Resolution is necessary in the public interest.
2. The Fund shall obtain a valuation before adopting resolution measures.

Article 20 Concept of unviable entity. A credit institution is unviable when: a) It is in default or likely to be in default in the near future. b) It has negative net worth. c) It is unable to pay its debts or other liabilities as they fall due. d) Its assets are less than its liabilities. e) It requires public financial support to continue its operations.

Section 2. Resolution Procedure

Article 21. Opening of the resolution process.

1. The Fund shall open the resolution process when the conditions for resolution are met.
2. The Fund shall notify the credit institution and the Bank of Spain of the opening of the process.
3. The Fund shall publish a notice of the opening of the process.

Article 22. Replacement of the administrative body as a resolution measure.

1. The Fund may replace the administrative body of the credit institution as a resolution measure.
2. The replacement shall be effective immediately upon adoption.
3. The replaced body shall cooperate with the Fund and the new administration.

Article 23. Resolution Plan.

1. The Fund shall prepare a resolution plan for each significant credit institution.
2. The resolution plan shall be updated at least every two years.
3. The resolution plan shall detail the measures to be taken in case of resolution.

Article 24. Preliminary measures.

1. The Fund may adopt preliminary measures to prepare for resolution.
2. Preliminary measures may include: a) Requiring the credit institution to increase its loss-absorbing capacity. b) Requiring the credit institution to simplify its organizational structure. c) Requiring the credit institution to provide information on its critical functions.

Section 3. Specific Resolution Instruments

Article 25. Resolution instruments. The Fund may use the following resolution instruments: a) Sale of business. b) Bridge bank. c) Asset separation. d) Bail-in.

Article 26. Sale of the entity's business.

1. The Fund may sell all or part of the assets, liabilities, or business of the credit institution to a purchaser.
2. The sale shall be conducted in a transparent and non-discriminatory manner.
3. The purchaser shall be a third party independent of the credit institution.

Article 27. Bridge bank.

1. The Fund may create a bridge bank to take over the assets, liabilities, or parts of the business of the credit institution.
2. The bridge bank shall be a credit institution authorized by the Bank of Spain.
3. The bridge bank shall be managed by the Fund.

CHAPTER V Financial Support Instruments

Article 28. Financial support instruments. The Fund may provide financial support to credit institutions through: a) Capital injections. b) Guarantees. c) Liquidity support. d) Asset purchases.

Article 29. Recapitalization instruments.

1. The Fund may inject capital into a credit institution through: a) Ordinary shares. b) Instruments convertible into ordinary shares. c) Preferred shares. d) Subordinated debt.
2. The recapitalization shall be subject to the approval of the Council of Ministers.

Article 30. Economic value of the entity and payment of recapitalization instruments.

1. The Fund shall determine the economic value of the credit institution before injecting capital.
2. The Fund shall receive compensation for the recapitalization instruments.
3. The compensation shall be commensurate with the risk assumed by the Fund.

Article 31. Ordinary shares or capital contributions.

1. The Fund may acquire ordinary shares in a credit institution.
2. The acquisition shall be subject to the approval of the Bank of Spain.
3. The Fund shall exercise the voting rights attached to the shares.

Article 32. Instruments convertible into ordinary shares or capital contributions.

1. The Fund may acquire instruments convertible into ordinary shares or capital contributions.
2. The conversion shall be subject to the conditions established in the instrument.
3. The Fund shall exercise the conversion rights when appropriate.

Article 33. Special regime for the subscription or acquisition by the FROB of recapitalization instruments.

1. The Fund may subscribe or acquire recapitalization instruments in a credit institution.
2. The subscription or acquisition shall be subject to the conditions established in this Law.
3. The Fund shall act in the best interest of the public.

Article 34. Conversion and divestment of instruments convertible into ordinary shares or capital contributions.

1. The Fund may convert instruments into ordinary shares or capital contributions.
2. The Fund may divest the instruments acquired.
3. The divestment shall be conducted in a transparent and non-discriminatory manner.

CHAPTER VI Asset Management Company

Article 35. Asset Management Company.

1. An Asset Management Company shall be created to manage the assets transferred from credit institutions in restructuring or resolution.
2. The Asset Management Company shall be a limited liability company.
3. The Fund shall be the sole shareholder of the Asset Management Company.

Article 36. Regime for the transfer of assets.

1. Credit institutions in restructuring or resolution shall transfer their impaired assets to the Asset Management Company.
2. The transfer shall be conducted at market value or at a value determined by the Fund.
3. The Asset Management Company shall manage the assets to maximize their value.

Article 37. Sanctioning regime for the asset management company and provisional replacement of the administrative body.

1. The Asset Management Company shall be subject to a sanctioning regime.
2. The Fund may provisionally replace the administrative body of the Asset Management Company if necessary.
3. The replacement shall be for a maximum period of six months, renewable once.

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Article 38. Supervision regime for asset management companies.

1. The Asset Management Company shall be supervised by the Bank of Spain.
2. The Bank of Spain shall ensure that the Asset Management Company complies with prudential requirements.
3. The Bank of Spain shall report to the Fund on the supervision of the Asset Management Company.

CHAPTER VII Management of Hybrid Instruments

Section 1. Management Shares for Hybrid Capital and Subordinated Debt Instruments

Article 39. Management Shares for Hybrid Capital and Subordinated Debt Instruments.

1. The Fund may issue management shares for hybrid capital and subordinated debt instruments.
2. The management shares shall represent the rights of the holders of the hybrid instruments.
3. The management shares shall be traded on a regulated market.

Article 40. Types of management shares for hybrid capital and subordinated debt instruments.

1. There shall be two types of management shares: a) Class A shares: representing the rights of the holders of preferred shares. b) Class B shares: representing the rights of the holders of convertible debt and subordinated debt.
2. The rights attached to each class of shares shall be established in the issuing documents.

Article 41. Market value.

1. The market value of the management shares shall be determined by the market.
2. The Fund shall monitor the market value of the management shares.
3. If the market value falls below a certain threshold, the Fund may intervene.

Article 42. Publication of management shares for hybrid capital and subordinated debt instruments.

1. The Fund shall publish information on the management shares.
2. The information shall include the number of shares issued, the rights attached, and the market value.
3. The publication shall be made in the Official State Gazette.

Section 2. Management of Hybrid Capital and Subordinated Debt Instruments by the Bank Restructuring and Resolution Fund

Article 43. Management of hybrid capital and subordinated debt instruments by the Bank Restructuring and Resolution Fund.

1. The Fund shall manage the hybrid capital and subordinated debt instruments of credit institutions in restructuring or resolution.
2. The management shall be conducted in the best interest of the public.
3. The Fund shall report to the Council of Ministers on the management of the instruments.

Article 44. Content of the management shares for hybrid capital and subordinated debt instruments agreed by the FROB.

1. The Fund shall agree on the content of the management shares.
2. The content shall include the rights and obligations of the holders of the shares.
3. The content shall be approved by the Council of Ministers.

Article 45. Valuation criteria.

1. The Fund shall determine the valuation criteria for the hybrid instruments.
2. The valuation shall be performed by an independent person.
3. The valuation shall be published in the Official State Gazette.

Article 46. Approval of the management share for hybrid capital and subordinated debt instruments.

1. The Fund shall approve the management share for hybrid capital and subordinated debt instruments.
2. The approval shall be subject to the conditions established in this Law.
3. The approval shall be published in the Official State Gazette.

Article 47. Publication and effective date of the FROB agreement.

1. The Fund shall publish the agreement on the management share.
2. The agreement shall take effect on the date of publication.
3. The publication shall be made in the Official State Gazette.

Article 48. Modification of a management share for hybrid capital and subordinated debt instruments.

1. The Fund may modify the management share for hybrid capital and subordinated debt instruments.
2. The modification shall be subject to the approval of the Council of Ministers.
3. The modification shall be published in the Official State Gazette.

Article 49. Rights of investors affected by a management share for hybrid capital and subordinated debt instruments.

1. Investors affected by the management share shall have the right to receive information.
2. Investors shall have the right to participate in the general meeting of the management shares.
3. Investors shall have the right to vote on matters affecting their rights.

Article 50. Rights of third parties.

1. Third parties shall have the right to access information on the management share.
2. Third parties shall have the right to challenge the decisions of the Fund.
3. Third parties shall have the right to claim compensation for damages.

Article 51. Sanctioning regime.

1. The Fund shall establish a sanctioning regime for the management of hybrid instruments.
2. The sanctioning regime shall include fines and other penalties.
3. The sanctioning regime shall be published in the Official State Gazette.

CHAPTER VIII Bank Restructuring and Resolution Fund

Section 1. Nature and Legal Regime

Article 52. Bank Restructuring and Resolution Fund.

1. The Bank Restructuring and Resolution Fund is a public law entity with legal personality and full capacity to act.
2. The Fund is attached to the Ministry of Economy and Competitiveness.
3. The Fund is independent in the exercise of its functions.

Article 53. Financing.

1. The Fund shall be financed by: a) Contributions from credit institutions. b) Public funds. c) Proceeds from the sale of assets. d) Loans from the European Stability Mechanism.
2. The contributions from credit institutions shall be proportional to their size and risk profile.

Article 54. Government of the Bank Restructuring and Resolution Fund.

1. The Fund shall be governed by a Board of Directors.
2. The Board of Directors shall be composed of: a) The Minister of Economy and Competitiveness, who shall preside. b) The Governor of the Bank of Spain. c) The Director General of the Fund. d) Two members appointed by the Minister of Economy and Competitiveness.
3. The Board of Directors shall meet at least once a month.

Article 55. Director General of the Bank Restructuring and Resolution Fund.

1. The Director General shall be appointed by the Council of Ministers.
2. The Director General shall be responsible for the day-to-day management of the Fund.
3. The Director General shall report to the Board of Directors.

Article 56. Parliamentary control.

1. The Fund shall be subject to parliamentary control.
2. The Fund shall submit an annual report to the Congress of Deputies.
3. The Congress of Deputies may hear the Director General on matters related to the Fund.

Article 57. Cooperation and coordination with other competent national authorities.

1. The Fund shall cooperate and coordinate with the Bank of Spain, the Securities Market Commission, and other competent authorities.
2. The Fund shall exchange information with the competent authorities.
3. The Fund shall participate in the European Banking Authority.

Article 58. Cooperation and coordination with other competent international authorities.

1. The Fund shall cooperate and coordinate with international authorities, such as the European Central Bank and the Single Resolution Board.
2. The Fund shall exchange information with international authorities.
3. The Fund shall participate in international forums on financial stability.

Article 59. Duty of secrecy.

1. The members of the Board of Directors, the Director General, and the staff of the Fund shall be subject to a duty of secrecy.
2. The duty of secrecy shall apply to all information obtained in the exercise of their functions.
3. The duty of secrecy shall survive the termination of their functions.

Article 60. Application of competition rules.

1. The Fund shall comply with competition rules.
2. The Fund shall not distort competition in the market.
3. The Fund shall act in a transparent and non-discriminatory manner.

Article 61. Adoption of international recommendations.

1. The Fund shall adopt international recommendations on resolution.
2. The Fund shall implement the recommendations of the Financial Stability Board.
3. The Fund shall report to the Council of Ministers on the implementation of the recommendations.

Section 2. Powers of the Bank Restructuring and Resolution Fund

Article 62. Powers of the Bank Restructuring and Resolution Fund.

1. The Fund shall have the following powers: a) To adopt early intervention measures. b) To adopt restructuring measures. c) To adopt resolution measures. d) To provide financial support. e) To manage the Asset Management Company.
2. The Fund shall exercise its powers in the public interest.

Article 63. Commercial powers.

1. The Fund shall have commercial powers to acquire, hold, and dispose of assets.
2. The Fund shall act as a commercial entity when exercising its commercial powers.
3. The Fund shall be subject to the rules of commercial law.

Article 64. General administrative powers.

1. The Fund shall have general administrative powers to adopt measures necessary for the exercise of its functions.
2. The Fund shall be subject to administrative law.
3. The Fund shall respect the rights of the individuals affected by its measures.

Article 65. Executive nature of measures.

1. The measures adopted by the Fund shall be executive.
2. The measures shall not require prior judicial approval.
3. The measures shall be subject to judicial review.

Article 66. Other applicable conditions.

1. The measures adopted by the Fund shall be subject to the conditions established in this Law.
2. The measures shall be proportionate to the objectives pursued.
3. The measures shall respect the rights of the individuals affected.

Article 67. Conditions applicable to financial operations and contractual compensation agreements.

1. The measures adopted by the Fund shall not affect the validity of financial operations and contractual compensation agreements.
2. The measures shall not trigger the termination of financial operations and contractual compensation agreements.
3. The measures shall be subject to the rules of financial law.

Article 68. Urgency measures.

1. The Fund may adopt urgency measures in case of emergency.
2. The urgency measures shall be adopted without prior notice.
3. The urgency measures shall be subject to subsequent approval by the Council of Ministers.

Article 69. Publication.

1. The Fund shall publish its decisions and agreements.
2. The publication shall be made in the Official State Gazette.
3. The publication shall include the reasons for the decisions and agreements.

Article 70. Powers to suspend contracts and guarantees.

1. The Fund may suspend contracts and guarantees in case of resolution.
2. The suspension shall be for a maximum period of two years.
3. The suspension shall be subject to the approval of the Council of Ministers.

CHAPTER IX Procedural Regime

Article 71. Appeal against decisions and agreements of the Bank Restructuring and Resolution Fund adopted in accordance with Article 63 of this Law.

1. Decisions and agreements of the Fund adopted in accordance with Article 63 of this Law may be appealed before the Contentious-Administrative Court.
2. The appeal shall be lodged within one month from the publication of the decision or agreement.
3. The appeal shall not suspend the execution of the decision or agreement.

Article 72. Special features of the appeal against decisions and administrative acts issued in the framework of early intervention, restructuring, and resolution processes.

1. Appeals against decisions and administrative acts issued in the framework of early intervention, restructuring, and resolution processes shall be subject to special features.
2. The appeals shall be heard by the Contentious-Administrative Court of Madrid.
3. The appeals shall be processed in an urgent manner.

Article 73. Special features of the appeal against decisions and administrative acts issued in matters of management of hybrid capital and subordinated debt instruments.

1. Appeals against decisions and administrative acts issued in matters of management of hybrid capital and subordinated debt instruments shall be subject to special features.
2. The appeals shall be heard by the Contentious-Administrative Court of Madrid.
3. The appeals shall be processed in an urgent manner.

Article 74. Impossibility of execution of judgment issued in the administrative appeals referred to in Articles 72 and 73 of this Law.

1. Judgments issued in the administrative appeals referred to in Articles 72 and 73 of this Law shall not be executable.
2. The judgments shall only have declaratory effects.
3. The judgments shall not affect the validity of the decisions and administrative acts.

Additional Provisions

First Additional Provision. Endowment of the FROB. The Fund shall be endowed with the assets and liabilities transferred from the credit institutions in restructuring or resolution.

Second Additional Provision. Advance payments from the Bank Restructuring and Resolution Fund to the Public Treasury. The Fund may make advance payments to the Public Treasury to cover its expenses.

Third Additional Provision. Constitution and regime of the actions of the Delegated Intervention of the General Intervention of the State Administration in the FROB. The Delegated Intervention of the General Intervention of the State Administration shall exercise control over the financial management of the Fund.

Fourth Additional Provision. Tax benefits in the Tax on Property Transfers and Documented Legal Acts for FROB operations. Operations carried out by the Fund shall be exempt from the Tax on Property Transfers and Documented Legal Acts.

Fifth Additional Provision. Effects of early intervention, restructuring, and resolution processes on the continuity of credit institutions' activities. The adoption of early intervention, restructuring, and resolution measures shall not affect the continuity of the activities of the credit institutions.

Sixth Additional Provision. Legal regime for the granting of guarantees to secure the economic obligations enforceable against the Bank Restructuring and Resolution Fund. Guarantees granted to secure the economic obligations enforceable against the Fund shall be subject to the legal regime established in this Law.

Seventh Additional Provision. Creation of the Asset Management Company for Assets from Bank Restructuring. An Asset Management Company for Assets from Bank Restructuring shall be created to manage the assets transferred from credit institutions in restructuring or resolution.

Eighth Additional Provision. Assets to be transferred to the Asset Management Company for Assets from Bank Restructuring. Credit institutions in restructuring or resolution shall transfer their impaired assets to the Asset Management Company for Assets from Bank Restructuring.

Ninth Additional Provision. Entities obliged to transfer Assets to the Asset Management Company for Assets from Bank Restructuring. All credit institutions in restructuring or resolution shall be obliged to transfer their assets to the Asset Management Company for Assets from Bank Restructuring.

Tenth Additional Provision. Separate estates. The assets transferred to the Asset Management Company for Assets from Bank Restructuring shall form a separate estate.

Eleventh Additional Provision. Consequences of losses incurred by credit institutions controlled by the FROB in relation to their net equity. Losses incurred by credit institutions controlled by the FROB shall be charged to their net equity.

Twelfth Additional Provision. Contracting by the emergency procedure in the FROB. The Fund may contract by the emergency procedure in case of urgency.

Thirteenth Additional Provision. Retail marketing of preferred shares, convertible debt instruments, and subordinated financings countable as own funds. The retail marketing of preferred shares, convertible debt instruments, and subordinated financings countable as own funds shall be subject to the conditions established in this Law.

Fourteenth Additional Provision. References to Royal Decree-Law 9/2009, of 26 June, on bank restructuring and strengthening of own funds of credit institutions. References to Royal Decree-Law 9/2009, of 26 June, shall be understood as references to the corresponding provisions of this Law.

Fifteenth Additional Provision. Special regime for the transformation of securitization management companies into FAB management companies. Securitization management companies may be transformed into FAB management companies under the special regime established in this Law.

Sixteenth Additional Provision. Granting of an extraordinary credit in the Budget of the Ministry of Economy and Competitiveness. An extraordinary credit shall be granted in the Budget of the Ministry of Economy and Competitiveness to cover the expenses of the Fund.

Seventeenth Additional Provision. Tax regime of the Bank Asset Funds and their participants. The tax regime of the Bank Asset Funds and their participants shall be established in this Law.

Eighteenth Additional Provision. Personnel costs and the Monitoring Commission of the Asset Management Company for Assets from Bank Restructuring. The personnel costs of the Asset Management Company for Assets from Bank Restructuring shall be covered by the Fund. A Monitoring Commission shall be created to oversee the activities of the Asset Management Company.

Nineteenth Additional Provision. Report on the remuneration of credit institutions in restructuring or resolution processes. The Fund shall submit a report on the remuneration of credit institutions in restructuring or resolution processes to the Council of Ministers.

Twentieth Additional Provision. Modification of Royal Legislative Decree 1/2010, of 2 July, approving the Consolidated Text of the Capital Companies Law. Royal Legislative Decree 1/2010, of 2 July, is modified to adapt it to the provisions of this Law.

Twenty-first Additional Provision. Tax regime of the Asset Management Company for Assets from Bank Restructuring. The tax regime of the Asset Management Company for Assets from Bank Restructuring shall be established in this Law.

Twenty-second Additional Provision. Executive claims initiated by the Asset Management Company for Assets from Bank Restructuring, S.A. (SAREB). Executive claims initiated by the Asset Management Company for Assets from Bank Restructuring, S.A. (SAREB) shall be subject to the procedural regime established in this Law.

Transitory Provisions

First Transitory Provision. Ongoing restructuring processes. The provisions of this Law shall apply to ongoing restructuring processes from the date of entry into force.

Second Transitory Provision. Ongoing sanctioning and authorization procedures. The provisions of this Law shall apply to ongoing sanctioning and authorization procedures from the date of entry into force.

Third Transitory Provision. Financial supports received. The provisions of this Law shall apply to financial supports received from the date of entry into force.

Fourth Transitory Provision. General viability plan. The general viability plan shall be updated in accordance with the provisions of this Law.

Fifth Transitory Provision. Regime for the contribution of assets of Law 8/2012, of 30 October, on the soundness and sale of real estate assets of the financial sector. The regime for the contribution of assets of Law 8/2012, of 30 October, shall be adapted to the provisions of this Law.

Sixth Transitory Provision. Core capital requirements until 31 December 2012. Core capital requirements until 31 December 2012 shall be determined in accordance with the provisions of this Law.

Repealing Provisions

Repealing Provision. Law 2/2012, of 29 June, on the soundness of the financial sector, is repealed, except for the provisions modifying other norms and the additional provisions 2, 3, 4, 6 to 12, 15, 17, 18 and 21.

Final Provisions

First Final Provision. Modification of Law 13/1985, of 25 May, on Investment Coefficients, Own Funds and Information Obligations of Financial Intermediaries. Law 13/1985, of 25 May, is modified to adapt it to the provisions of this Law.

Second Final Provision. Modification of Royal Legislative Decree 1298/1986, of 28 June, on Adaptation of Current Law in Matters of Credit Institutions to that of the European Communities. Royal Legislative Decree 1298/1986, of 28 June, is modified to adapt it to the provisions of this Law.

Third Final Provision. Modification of Law 24/1988, of 28 July, on the Securities Market. Law 24/1988, of 28 July, is modified to adapt it to the provisions of this Law.

Fourth Final Provision. Modification of Law 26/1988, of 29 July, on Discipline and Intervention of Credit Institutions. Law 26/1988, of 29 July, is modified to adapt it to the provisions of this Law.

Fifth Final Provision. Modification of Law 29/1998, of 13 July, regulating the Contentious-Administrative Jurisdiction. Law 29/1998, of 13 July, is modified to adapt it to the provisions of this Law.

Sixth Final Provision. Modification of Law 22/2003, of 9 July, Bankruptcy. Law 22/2003, of 9 July, is modified to adapt it to the provisions of this Law.

Seventh Final Provision. Modification of Royal Decree-Law 2/2011, of 18 February, for the strengthening of the financial system. Royal Decree-Law 2/2011, of 18 February, is modified to adapt it to the provisions of this Law.

Eighth Final Provision. Modification of Royal Decree-Law 16/2011, of 14 October, creating the Deposit Guarantee Fund for Credit Institutions. Royal Decree-Law 16/2011, of 14 October, is modified to adapt it to the provisions of this Law.

Ninth Final Provision. Modification of Royal Decree-Law 2/2012, of 3 February, on the soundness of the financial sector. Royal Decree-Law 2/2012, of 3 February, is modified to adapt it to the provisions of this Law.

Tenth Final Provision. Modification of Law 2/2012, of 29 June, on the General State Budgets for the year 2012. Law 2/2012, of 29 June, is modified to adapt it to the provisions of this Law.

Eleventh Final Provision. Modification of Royal Decree-Law 21/2012, of 13 July, on liquidity measures for Public Administrations and in the financial sphere. Royal Decree-Law 21/2012, of 13 July, is modified to adapt it to the provisions of this Law.

Twelfth Final Provision. Modification of Law 41/1999, of 12 November, on payment systems and securities settlement. Law 41/1999, of 12 November, is modified to adapt it to the provisions of this Law.

Thirteenth Final Provision. Modification of Royal Decree-Law 11/2010, of 9 July, on governing bodies and other aspects of the legal regime of Savings Banks. Royal Decree-Law 11/2010, of 9 July, is modified to adapt it to the provisions of this Law.

Fourteenth Final Provision. Modification of Law 44/2002, of 22 November, on measures for the reform of the financial system. Law 44/2002, of 22 November, is modified to adapt it to the provisions of this Law.

Fifteenth Final Provision. Modification of the consolidated text of the Law on the Tax on Property Transfers and Documented Legal Acts, approved by Royal Legislative Decree 1/1993, of 24 September. The consolidated text of the Law on the Tax on Property Transfers and Documented Legal Acts, approved by Royal Legislative Decree 1/1993, of 24 September, is modified to adapt it to the provisions of this Law.

Sixteenth Final Provision. Modification of the consolidated text of the Law regulating Local Treasuries, approved by Royal Legislative Decree 2/2004, of 5 March. The consolidated text of the Law regulating Local Treasuries, approved by Royal Legislative Decree 2/2004, of 5 March, is modified to adapt it to the provisions of this Law.

Seventeenth Final Provision. Modification of Royal Legislative Decree 4/2004, of 5 March, approving the consolidated text of the Corporate Income Tax Law. Royal Legislative Decree 4/2004, of 5 March, is modified to adapt it to the provisions of this Law.

Eighteenth Final Provision. Legal regime applicable to guarantees constituted in favor of the Bank Restructuring and Resolution Fund and the Deposit Guarantee Fund for Credit Institutions. The legal regime applicable to guarantees constituted in favor of the Bank Restructuring and Resolution Fund and the Deposit Guarantee Fund for Credit Institutions shall be established in this Law.

Nineteenth Final Provision. Competence Titles. The competence titles for the adoption of measures under this Law shall be established in this Law.

Twentieth Final Provision. Development Power. The Government shall have the power to develop this Law through regulations.

Twenty-first Final Provision. Termination of the validity of Chapter VII. Chapter VII shall terminate its validity on 31 December 2015.

Twenty-second Final Provision. Entry into force. This Law shall enter into force on the day following its publication in the Official State Gazette.