BOLETÍN OFICIAL DEL ESTADO

Núm. 39 Saturday 14 February 2015 Sec. I. Page 12319

I. GENERAL PROVISIONS

MINISTRY OF ECONOMY AND COMPETITIVENESS

1455 Royal Decree 84/2015, of 13 February, developing Law 10/2014, of 26 June, on the regulation, supervision and solvency of credit institutions.

INDEX

Preliminary Title. General Provisions.
Article 1. Purpose.
Article 2. Scope of application.

Title I. Activity Requirements.
Chapter I. Authorization, registration and activity of credit institutions. Section 1. Authorization and registration of banks.
Article 3. Authorization and registration of banks.
Article 4. Requirements to exercise the activity.
Article 5. Requirements of the application.
Article 6. Denial of the application.
Article 7. Commencement of activities.
Article 8. Temporary limitations on the activity of new banks.
Article 9. Authorization of banks subject to control by foreign persons.

Section 2. Authorization of modifications of articles of association and structural modifications.
Article 10. Modification of the articles of association.
Article 11. Authorization and registration of structural modification operations.

Section 3. Revocation and expiration.
Article 12. Procedure for revocation and waiver.
Article 13. Expiration of the authorization.

Section 4. Cross-border activity.
Article 14. Opening of branches and free provision of services in other Member States of the European Union by Spanish credit institutions.
Article 15. Opening of branches and free provision of services in non-Member States of the European Union by Spanish credit institutions.
Article 16. Opening of branches and free provision of services in Spain by credit institutions from another Member State of the European Union.
Article 17. Opening of branches and free provision of services in Spain by credit institutions from non-Member States of the European Union.
Article 18. Acting through other credit institutions.
Article 19. Representative offices.

Section 5. Offices, agents and delegation of functions.
Article 20. Offices of credit institutions.
Article 21. Agents of credit institutions.

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Article 22. Delegation of the provision of services or the exercise of functions by credit institutions.

Chapter II. Significant holdings.
Article 23. Definition and calculation of significant holdings.
Article 24. Information to be provided by the potential acquirer.
Article 25. Assessment of proposed acquisitions of significant holdings.
Article 26. Suspension of the assessment period.
Article 27. Information on the capital structure of credit institutions.
Article 28. Publication of shareholdings.

Chapter III. Fitness, incompatibilities and registration of senior management.
Article 29. Assessment of fitness.
Article 30. Requirements of commercial and professional integrity.
Article 31. Requirements of knowledge and experience.
Article 32. Ability to exercise good governance of the entity.
Article 33. Selection, control and evaluation of fitness requirements by credit institutions.
Article 34. Register of senior management.
Article 35. Limits on obtaining loans, guarantees and collateral by senior management of the entity.

Chapter IV. Corporate governance and remuneration policy.
Article 36. Obligations regarding corporate governance and remuneration policy.
Article 37. Publication obligations regarding corporate governance and remuneration policy.
Article 38. Nomination Committee.
Article 39. Remuneration Committee.
Article 40. Monitoring of remuneration policies.
Article 41. Risk management function.
Article 42. Risk Committee.

Title II. Solvency of credit institutions. Chapter I. Systems, procedures and mechanisms for risk management and capital self-assessment.
Article 43. Requirements for organization, risk management and internal control.
Article 44. Responsibility of the board of directors in the assumption of risks.
Article 45. Application of the internal capital adequacy assessment process.
Article 46. Credit and counterparty risk.
Article 47. Residual risk.
Article 48. Concentration risk.
Article 49. Securitization risk.
Article 50. Market risk.
Article 51. Interest rate risk arising from activities outside the trading book.
Article 52. Operational risk.
Article 53. Liquidity risk.
Article 54. Excessive leverage risk.
Article 55. Solvency regime applicable to branches of credit institutions from non-Member States of the European Union.
Article 56. Exposures to the public sector.

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Article 57. Adoption of measures to return to compliance with solvency rules.

Chapter II. Capital buffers.
Article 58. Combined capital buffer requirement.
Article 59. Application level of the capital conservation buffer.
Article 60. Calculation of the specific countercyclical capital buffer percentages for each entity.
Article 61. Setting of countercyclical buffer percentages.
Article 62. Identification of Global Systemically Important Institutions.
Article 63. Identification of Other Systemically Important Institutions.
Article 64. Setting of the buffer for Other Systemically Important Institutions.
Article 65. Joint application of buffers for G-SIIs, O-SIIs and systemic risk buffers.
Article 66. Notification obligations of the Bank of Spain regarding G-SIIs and O-SIIs.
Article 67. Setting of the systemic risk buffer.
Article 68. Procedure for setting the systemic risk buffer below 3 percent.
Article 69. Procedure for setting the systemic risk buffer between 3 and 5 percent.
Article 70. Procedure for setting the systemic risk buffer above 5 percent.
Article 71. Publication of systemic risk buffers.
Article 72. Recognition of the systemic risk buffer percentage.
Article 73. Calculation of the maximum distributable amount.
Article 74. Obligations of the entity in case of non-compliance with combined buffer requirements.
Article 75. Content of the capital conservation plan.

Title III. Supervision.
Chapter I. Objective scope of the supervisory function.
Article 76. Content of supervisory review and evaluation.
Article 77. Technical criteria applicable to supervisory review and evaluation.
Article 78. Internal methods for calculating own funds requirements.
Article 79. Establishment of supervisory benchmarks for internal methods for calculating own funds requirements.
Article 80. Permanent review of the authorization to use internal methods.

Chapter II. Subjective scope of the supervisory function.
Article 81. Supervision of consolidatable groups.
Article 82. Inclusion of holding companies in consolidated supervision.
Article 83. Information requests and checks on the activity of mixed holding companies.

Chapter III. Collaboration between supervisory authorities.
Article 84. Collaboration of the Bank of Spain with other competent authorities.
Article 85. Collaboration of the Bank of Spain with authorities of other countries in the framework of branch supervision.
Article 86. Operation of supervisory colleges.
Article 87. Exchange of information on supervision on a consolidated basis.
Article 88. On-site inspections of branch activities.

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Article 89. Verification of information relating to entities from other Member States of the European Union.
Article 90. Joint decision.
Article 91. Procedure for declaring branches as significant and information obligations of the Bank of Spain regarding this.

Chapter IV. Information and publication obligations.
Article 92. Publication obligations of the Bank of Spain.
Article 93. Prudentially relevant information of credit institutions.

Additional Provision First. Prior approval of Additional Tier 1 and Tier 2 capital instruments. Additional Provision Second. Integration of the Bank of Spain into the Single Supervisory Mechanism. Additional Provision Third. Activities related to securities markets. Additional Provision Fourth. Authorization for the transformation into banks of already constituted companies. Additional Provision Fifth. Composition of the board of trustees of banking foundations and requirements of commercial and professional integrity. Additional Provision Sixth. Representatives of the entities adhering to the Management Committee of the Deposit Guarantee Fund. Additional Provision Seventh. References to repealed legislation.

Transitional Provision First. Transitional regime for the application of Article 458 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013. Transitional Provision Second. Pending procedures.

Sole Repealing Provision. Repeal of legislation.

Final Provision First. Modification of the Development Regulation of Law 13/1989, of 26 May, on Credit Cooperatives, approved by Royal Decree 84/1993, of 22 January. Final Provision Second. Modification of Royal Decree 2660/1998, of 14 December, on the exchange of foreign currency in establishments open to the public other than credit institutions. Final Provision Third. Modification of Royal Decree 1332/2005, of 11 November, developing Law 5/2005, of 22 April, on the supervision of financial conglomerates and modifying other laws of the financial sector. Final Provision Fourth. Competence title. Final Provision Fifth. Incorporation of European Union law. Final Provision Sixth. Development powers. Final Provision Seventh. No increase in expenditure. Final Provision Eighth. Entry into force.

I

The proper functioning of the financial system is essential for the efficient allocation of savings to the financing of economic activity. In this allocation, credit institutions play a key role. These are the main providers of financing to families, companies and Public Administrations and, in addition, most of household savings are deposited with them.

Due to the singularities of banking activity, the solvency of entities is of vital importance for the proper functioning of the financial sector as a whole. Among these singularities, the intrinsic fragility arising from the transformation of asset and liability maturities stands out first. Credit institutions usually borrow at relatively short terms to subsequently grant financing at significantly longer terms. Under normal circumstances, this mismatch between asset and liability maturities is not worrying. However, the mere appearance of doubts about the solvency of entities could trigger a mass withdrawal of deposits from the entity or its exclusion from wholesale credit markets. These impediments to refinancing their assets could lead to a liquidity crisis and ultimately deteriorate the viability of an entity and confidence in the entire banking system.

Additionally, unlike other sectors of the economy, credit institutions usually present significant exposures to other entities. These close financial links, combined with the high levels of leverage with which entities operate, cause the difficulties of a credit institution in meeting its debt service to easily contagion the rest of the financial sector.

On the other hand, in boom periods, the apparent reduction of the risk of financed activities along with the appearance of profits that reinforce the capital base of entities allows them to increase the pace of credit granting. Similarly, in recession periods, the increase in risk and the reduction of the capital base derived from negative results lead entities to contract the granting of financing. In this way, the monetary supply of the economy experiences a procyclical behavior.

Traditionally, this procyclicality has been fought mainly through monetary policy. However, monetary policy is ineffective when the balance sheets of financial entities are seriously damaged. Indeed, the reduction in own funds levels resulting from the assumption of unexpected losses, combined with the increase in the risk of exposures, forces entities to reduce credit to continue meeting the minimum capital requirements demanded by regulation. The reduction in credit, in turn, prevents the transmission of monetary policy to the real economy.

These particularities cause financial crises to have a special impact on the real economy. Moreover, these effects are not limited to a point contraction of aggregate demand but even affect the growth potential of economies. Indeed, the interruption of the credit channel affects the two main sources of long-term growth by making it difficult, on the one hand, the accumulation of capital and, on the other, the financing of those activities that generate technological progress.

For these reasons, credit institutions are subject to regulation with no comparable equivalent in other economic activities. This regulation has historically been agreed upon worldwide with the aim of avoiding regulatory arbitrage between countries, which could generate artificial competitive advantages and lead to instability in the global financial system. Currently, the "Global regulatory framework for strengthening banks and banking systems" (Basel III), presented by the Basel Committee on Banking Supervision in December 2010, is the axis around which international prudential regulation pivots. The implementation and adaptation of Basel III to the legal order of the European Union has taken place through two fundamental norms: Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms, and amending Regulation (EU) No 648/2012, and Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.

II

Recently, Regulation (EU) No 1024/2013 of the Council of 15 October 2013 entered into force, which entrusts the European Central Bank with specific tasks regarding policies related to the prudential supervision of credit institutions. Through this Regulation, the Single Supervisory Mechanism (SSM) is approved, composed of the European Central Bank and National Supervisory Authorities, including the Bank of Spain. Regulation 1024/2013 is developed by Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014, which establishes the framework for cooperation in the Single Supervisory Mechanism between the European Central Bank and competent national authorities and designated national authorities.

The SSM is established as one of the pillars of the Banking Union, along with the Single Resolution Mechanism, also recently created, supported by a unique, comprehensive and detailed normative code for financial services throughout the internal market.

This measure entails attributing to the SSM, and specifically to the European Central Bank, the functions of supervision, including authorization, revocation or imposition of sanctions on credit institutions, which had traditionally been carried out by national authorities. The European Central Bank therefore assumes supervision of the entire banking system, exercising direct supervision over the most significant entities and indirect supervision over the less significant ones. The relevance of the implementation of the SSM for Spain is appreciated in the fact that 15 groups of credit institutions have been identified as significant, representing more than 90% of the assets of the system.

This change in the legal framework of competences in matters of supervision makes it necessary to adapt our legal order to the new reality, in particular to the distribution of competences between the European Central Bank and the Bank of Spain, which is also addressed in this Royal Decree. Thus, Title I, which regulates the requirements that credit institutions must meet, collects the necessary adaptations of our legal order, essentially formal, to adjust to this new supervisory framework established by the European Union, especially in matters of authorizations, acquisition of significant holdings and assessment of the fitness of senior management of credit institutions. For its part, Title II also collects the appropriate adaptations to the SSM regarding capital buffers. This regime is closed, in turn, with what is provided in Additional Provision Second, which reaches the functions considered, "stricto sensu", of supervision, regulated in Title III, under the principle that the European Central Bank exercises direct supervision over the most significant entities and the Bank of Spain exercises it over the less significant ones.

III

The transposition of Directive 2013/36/EU of 26 June 2013 has occurred in two stages. In a first phase, Royal Decree-Law 14/2013 of 29 November, on urgent measures for the adaptation of Spanish law to European Union legislation in matters of supervision and solvency of financial entities, transposed those most urgent aspects of the directive, whose non-transposition could have hindered the exercise by the Bank of Spain of the new powers attributed by European Union legislation.

Later, Law 10/2014 of 26 June on the regulation, supervision and solvency of credit institutions would undertake the full incorporation into Spanish law of the provisions of the directive requiring legal rank for transposition. However, in addition to transposition, Law 10/2014 of 26 June carries out a consolidation into a single text of the main norms of regulation and discipline of credit institutions that, until then, were dispersed in norms, dating back even to 1946, and which, due to successive modifications of banking legislation, were, in many cases, difficult to understand.

Similarly, this Royal Decree aims not only to complete the regulatory development of Law 10/2014 of 26 June, but also to consolidate into a single text those norms with regulatory rank of regulation and discipline of credit institutions. This is why this Royal Decree consolidates into a single text, on the one hand, the provisions on credit institutions of Royal Decree 216/2008 of 15 February on own funds of financial entities, which must remain in force after the entry into force of Regulation (EU) No 575/2013 of 26 June 2013, and Directive 2013/36/EU of 26 June 2013, and, on the other hand, Royal Decree 1245/1995 of 14 July on the creation of banks, cross-border activity and other issues related to the legal regime of credit institutions. To this end, the Royal Decree rests on three major titles. The first of them develops the regime of access to the activity of credit institutions which was largely contained in Royal Decree 1245/1995 of 14 July. It should be noted, however, that the authorization regime provided for in this title is limited to banks. Savings banks and credit cooperatives will be governed by their specific legislation.

The main novelties introduced by Directive 2013/36/EU of 26 June 2013 in this title are found in Chapter IV regarding obligations in matters of corporate governance and remuneration policy. In matters of remuneration policy, this Royal Decree specifies the type of information that entities must publish. Greater transparency in this area will allow shareholders of the entity to exercise greater control over the quality of its senior management.

In matters of corporate governance, on the other hand, the functions that the three committees already introduced by Law 10/2014 of 26 June should perform are developed. Among such functions, the obligation of the nomination committee to adopt measures to achieve gender equality among executive positions stands out.

Although the bulk of solvency requirements is in Regulation (EU) No 575/2013 of 26 June, Title II introduces certain provisions related to this matter that proceed from Directive 2013/36/EU. Specifically, Chapter I of this title requires entities to carry out a process of self-assessment of their capital levels taking into account the nature, scale and complexity of their activities, and to have adequate procedures to cover the main risks to which their activity is subject. Likewise, in this chapter, the application of the articles of Regulation (EU) No 575/2013 of 26 June regarding risk weights for the calculation of capital requirements assigned to exposures to Autonomous Communities and Local Corporations, as well as to those of the bodies dependent on them, is clarified. Thus, on the one hand, the application of the same weights as the General Administration of the State for Autonomous Communities and Local Entities is established, while it is considered that the Organic Law 8/1980 of 22 September on the financing of Autonomous Communities, the Royal Decree-Law 17/2014 of 26 December on financial sustainability measures for Autonomous Communities and Local Entities and others of an economic nature, the Organic Law 2/2012 of 27 April on Budgetary Stability and Financial Sustainability and the Legislative Decree 2/2004 of 5 March, approving the consolidated text of the Basic State Law on Local Regime, establish a guarantee of liquidity and solvency for these entities similar to that of the State. On the other hand, it is established that the risk weights applicable to exposures to the General Administration of the State will apply to exposures to Autonomous Communities and Local Entities, provided that they meet the requirements established in the aforementioned norms.

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March, approving the consolidated text of the Basic State Law on Local Regime, establish a guarantee of liquidity and solvency for these entities similar to that of the State. On the other hand, it is established that the risk weights applicable to exposures to the General Administration of the State will apply to exposures to Autonomous Communities and Local Entities, provided that they meet the requirements established in the aforementioned norms.

The second chapter of Title II develops the regime of capital buffers, which aims to strengthen the capital position of credit institutions and mitigate the procyclical nature of the financial system. The combined capital buffer requirement includes the capital conservation buffer, the countercyclical capital buffer, and the buffers for Global Systemically Important Institutions (G-SIIs) and Other Systemically Important Institutions (O-SIIs). The Bank of Spain is responsible for setting the countercyclical capital buffer and the systemic risk buffer, within the limits established by European Union legislation. The decree also establishes the procedures for identifying G-SIIs and O-SIIs and the corresponding capital buffers.

Title III regulates the supervisory framework, adapting it to the Single Supervisory Mechanism. It defines the scope of the supervisory function, both objective and subjective, and establishes the collaboration mechanisms between the Bank of Spain and other supervisory authorities, including the European Central Bank. It also sets out the information and publication obligations for credit institutions and the Bank of Spain.

The Additional Provisions address specific matters such as the approval of capital instruments, the integration of the Bank of Spain into the SSM, activities related to securities markets, the transformation of companies into banks, the composition of the board of trustees of banking foundations, and references to repealed legislation.

The Transitional Provisions establish a transitional regime for the application of certain articles of Regulation (EU) No 575/2013 and regulate pending procedures.

The Repealing Provision repeals previous legislation.

The Final Provisions modify other regulations, establish competence titles, incorporate European Union law, define development powers, ensure no increase in expenditure, and set the entry into force of the Royal Decree.

The proper functioning of the financial system is essential for the efficient allocation of savings to the financing of economic activity. In this allocation, credit institutions play a key role. These are the main providers of financing to families, companies and Public Administrations and, in addition, most of household savings are deposited with them.

Due to the singularities of banking activity, the solvency of entities is of vital importance for the proper functioning of the financial sector as a whole. Among these singularities, the intrinsic fragility arising from the transformation of asset and liability maturities stands out first. Credit institutions usually borrow at relatively short terms to subsequently grant financing at significantly longer terms. Under normal circumstances, this mismatch between asset and liability maturities is not worrying. However, the mere appearance of doubts about the solvency of entities could trigger a mass withdrawal of deposits from the entity or its exclusion from wholesale credit markets. These impediments to refinancing their assets could lead to a liquidity crisis and ultimately deteriorate the viability of an entity and confidence in the entire banking system.

Additionally, unlike other sectors of the economy, credit institutions usually present significant exposures to other entities. These close financial links, combined with the high levels of leverage with which entities operate, cause the difficulties of a credit institution in meeting its debt service to easily contagion the rest of the financial sector.

On the other hand, in boom periods, the apparent reduction of the risk of financed activities along with the appearance of profits that reinforce the capital base of entities allows them to increase the pace of credit granting. Similarly, in recession periods, the increase in risk and the reduction of the capital base derived from negative results lead entities to contract the granting of financing. In this way, the monetary supply of the economy experiences a procyclical behavior.

Traditionally, this procyclicality has been fought mainly through monetary policy. However, monetary policy is ineffective when the balance sheets of financial entities are seriously damaged. Indeed, the reduction in own funds levels resulting from the assumption of unexpected losses, combined with the increase in the risk of exposures, forces entities to reduce credit to continue meeting the minimum capital requirements demanded by regulation. The reduction in credit, in turn, prevents the transmission of monetary policy to the real economy.

These particularities cause financial crises to have a special impact on the real economy. Moreover, these effects are not limited to a point contraction of aggregate demand but even affect the growth potential of economies. Indeed, the interruption of the credit channel affects the two main sources of long-term growth by making it difficult, on the one hand, the accumulation of capital and, on the other, the financing of those activities that generate technological progress.

For these reasons, credit institutions are subject to regulation with no comparable equivalent in other economic activities. This regulation has historically been agreed upon worldwide with the aim of avoiding regulatory arbitrage between countries, which could generate artificial competitive advantages and lead to instability in the global financial system. Currently, the "Global regulatory framework for strengthening banks and banking systems" (Basel III), presented by the Basel Committee on Banking Supervision in December 2010, is the axis around which international prudential regulation pivots. The implementation and adaptation of Basel III to the legal order of the European Union has taken place through two fundamental norms: Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms, and amending Regulation (EU) No 648/2012, and Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.

Recently, Regulation (EU) No 1024/2013 of the Council of 15 October 2013 entered into force, which entrusts the European Central Bank with specific tasks regarding policies related to the prudential supervision of credit institutions. Through this Regulation, the Single Supervisory Mechanism (SSM) is approved, composed of the European Central Bank and National Supervisory Authorities, including the Bank of Spain. Regulation 1024/2013 is developed by Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014, which establishes the framework for cooperation in the Single Supervisory Mechanism between the European Central Bank and competent national authorities and designated national authorities.

The SSM is established as one of the pillars of the Banking Union, along with the Single Resolution Mechanism, also recently created, supported by a unique, comprehensive and detailed normative code for financial services throughout the internal market.

This measure entails attributing to the SSM, and specifically to the European Central Bank, the functions of supervision, including authorization, revocation or imposition of sanctions on credit institutions, which had traditionally been carried out by national authorities. The European Central Bank therefore assumes supervision of the entire banking system, exercising direct supervision over the most significant entities and indirect supervision over the less significant ones. The relevance of the implementation of the SSM for Spain is appreciated in the fact that 15 groups of credit institutions have been identified as significant, representing more than 90% of the assets of the system.

This change in the legal framework of competences in matters of supervision makes it necessary to adapt our legal order to the new reality, in particular to the distribution of competences between the European Central Bank and the Bank of Spain, which is also addressed in this Royal Decree. Thus, Title I, which regulates the requirements that credit institutions must meet, collects the necessary adaptations of our legal order, essentially formal, to adjust to this new supervisory framework established by the European Union, especially in matters of authorizations, acquisition of significant holdings and assessment of the fitness of senior management of credit institutions. For its part, Title II also collects the appropriate adaptations to the SSM regarding capital buffers. This regime is closed, in turn, with what is provided in Additional Provision Second, which reaches the functions considered, "stricto sensu", of supervision, regulated in Title III, under the principle that the European Central Bank exercises direct supervision over the most significant entities and the Bank of Spain exercises it over the less significant ones.

The transposition of Directive 2013/36/EU of 26 June 2013 has occurred in two stages. In a first phase, Royal Decree-Law 14/2013 of 29 November, on urgent measures for the adaptation of Spanish law to European Union legislation in matters of supervision and solvency of financial entities, transposed those most urgent aspects of the directive, whose non-transposition could have hindered the exercise by the Bank of Spain of the new powers attributed by European Union legislation.

Later, Law 10/2014 of 26 June on the regulation, supervision and solvency of credit institutions would undertake the full incorporation into Spanish law of the provisions of the directive requiring legal rank for transposition. However, in addition to transposition, Law 10/2014 of 26 June carries out a consolidation into a single text of the main norms of regulation and discipline of credit institutions that, until then, were dispersed in norms, dating back even to 1946, and which, due to successive modifications of banking legislation, were, in many cases, difficult to understand.

Similarly, this Royal Decree aims not only to complete the regulatory development of Law 10/2014 of 26 June, but also to consolidate into a single text those norms with regulatory rank of regulation and discipline of credit institutions. This is why this Royal Decree consolidates into a single text, on the one hand, the provisions on credit institutions of Royal Decree 216/2008 of 15 February on own funds of financial entities, which must remain in force after the entry into force of Regulation (EU) No 575/2013 of 26 June 2013, and Directive 2013/36/EU of 26 June 2013, and, on the other hand, Royal Decree 1245/1995 of 14 July on the creation of banks, cross-border activity and other issues related to the legal regime of credit institutions. To this end, the Royal Decree rests on three major titles. The first of them develops the regime of access to the activity of credit institutions which was largely contained in Royal Decree 1245/1995 of 14 July. It should be noted, however, that the authorization regime provided for in this title is limited to banks. Savings banks and credit cooperatives will be governed by their specific legislation.

The main novelties introduced by Directive 2013/36/EU of 26 June 2013 in this title are found in Chapter IV regarding obligations in matters of corporate governance and remuneration policy. In matters of remuneration policy, this Royal Decree specifies the type of information that entities must publish. Greater transparency in this area will allow shareholders of the entity to exercise greater control over the quality of its senior management.

In matters of corporate governance, on the other hand, the functions that the three committees already introduced by Law 10/2014 of 26 June should perform are developed. Among such functions, the obligation of the nomination committee to adopt measures to achieve gender equality among executive positions stands out.

Although the bulk of solvency requirements is in Regulation (EU) No 575/2013 of 26 June, Title II introduces certain provisions related to this matter that proceed from Directive 2013/36/EU. Specifically, Chapter I of this title requires entities to carry out a process of self-assessment of their capital levels taking into account the nature, scale and complexity of their activities, and to have adequate procedures to cover the main risks to which their activity is subject. Likewise, in this chapter, the application of the articles of Regulation (EU) No 575/2013 of 26 June regarding risk weights for the calculation of capital requirements assigned to exposures to Autonomous Communities and Local Corporations, as well as to those of the bodies dependent on them, is clarified. Thus, on the one hand, the application of the same weights as the General Administration of the State for Autonomous Communities and Local Entities is established, while it is considered that the Organic Law 8/1980 of 22 September on the financing of Autonomous Communities, the Royal Decree-Law 17/2014 of 26 December on financial sustainability measures for Autonomous Communities and Local Entities and others of an economic nature, the Organic Law 2/2012 of 27 April on Budgetary Stability and Financial Sustainability and the Legislative Decree 2/2004 of 5 March, approving the consolidated text of the Basic State Law on Local Regime, establish a guarantee of liquidity and solvency for these entities similar to that of the State. On the other hand, it is established that the risk weights applicable to exposures to the General Administration of the State will apply to exposures to Autonomous Communities and Local Entities, provided that they meet the requirements established in the aforementioned norms.

The second chapter of Title II develops the regime of capital buffers, which aims to strengthen the capital position of credit institutions and mitigate the procyclical nature of the financial system. The combined capital buffer requirement includes the capital conservation buffer, the countercyclical capital buffer, and the buffers for Global Systemically Important Institutions (G-SIIs) and Other Systemically Important Institutions (O-SIIs). The Bank of Spain is responsible for setting the countercyclical capital buffer and the systemic risk buffer, within the limits established by European Union legislation. The decree also establishes the procedures for identifying G-SIIs and O-SIIs and the corresponding capital buffers.

Title III regulates the supervisory framework, adapting it to the Single Supervisory Mechanism. It defines the scope of the supervisory function, both objective and subjective, and establishes the collaboration mechanisms between the Bank of Spain and other supervisory authorities, including the European Central Bank. It also sets out the information and publication obligations for credit institutions and the Bank of Spain.

The Additional Provisions address specific matters such as the approval of capital instruments, the integration of the Bank of Spain into the SSM, activities related to securities markets, the transformation of companies into banks, the composition of the board of trustees of banking foundations, and references to repealed legislation.

The Transitional Provisions establish a transitional regime for the application of certain articles of Regulation (EU) No 575/2013 and regulate pending procedures.

The Repealing Provision repeals previous legislation.

The Final Provisions modify other regulations, establish competence titles, incorporate European Union law, define development powers, ensure no increase in expenditure, and set the entry into force of the Royal Decree.