Adapts Spanish bank solvency rules to European Union standards

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1. It incorporates the European prudential requirements Regulation (EU) No 575/2013 as Spanish law and expands the supervisory powers of the Bank of Spain and the National Securities Market Commission to enforce it.
2. It limits variable pay for employees of banks and investment services firms: as a rule it cannot exceed one hundred percent of fixed pay, and only with shareholder approval can it reach two hundred percent.
3. Credit financial establishments, which are not covered by the European Regulation, remain subject to the previous legal regime until specific legislation for them is passed.
4. It regulates for the first time in Spain the legal entity identifier, a code that unambiguously identifies parties to a derivatives contract, and assigns its issuance and management to the Mercantile Registry.
5. It extends by one month the deadline for municipalities that had not done so to request support measures under Royal Decree-Lawroyal decree-law A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses. 8/2013, and allows the Local Government Board or, if none exists, the Mayor to approve the request and adjustment plan.
6. It reforms several laws: it strengthens the Bank of Spain's powers, allows the FROBFROB Fund for the Orderly Restructuring of Banks, the public body that manages the restructuring and resolution of troubled banks.'s equity to be repaired, makes permanent the allocation of losses to shareholders and subordinated creditors, clarifies SarebSareb Company for the Management of Assets Proceeding from Bank Restructuring, which manages assets of intervened banks.'s position in insolvency proceedings, and allows certain deferred tax assets to keep counting as capital.

Who it affects

• Banks and their consolidated groups: They must comply with the European solvency Regulation under reinforced Bank of Spain supervision.
• Investment services firms: They face rules parallel to those for banks, supervised by the National Securities Market Commission.
• Senior executives and risk-taking employees at those entities: Their variable pay is capped relative to fixed pay.
• Municipalities with financial problems: They get one extra month to request support measures and can approve them without political deadlock.
• Autonomous Communities: The 120-installment repayment extension for 2008 and 2009 financing settlements is modified.

Words worth knowing

Recursos propios

Money and reserves a bank must hold to cover potential losses.

Requisitos prudenciales

Rules requiring financial institutions to keep sufficient capital and risk management.

FROB

Fund for the Orderly Restructuring of Banks, the public body that manages the restructuring and resolution of troubled banks.

Sareb

Company for the Management of Assets Proceeding from Bank Restructuring, which manages assets of intervened banks.

Activos por impuesto diferido

Deferred tax assets: overpaid taxes an entity can recover in future fiscal years.

royal decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries