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What it is

Proposal to fully repay people who bought preferred shares

Admitted step 2 of 7 · Unfinished

It is a members’ bill. Introduced by parliamentary groups, the Senate, regional governments or citizens. It was introduced on 3 December 2019. Introduced by: Comunidad Autónoma de Galicia - Parlamento.

Official title: Private member's bill reforming Law 9/2012, of 14 November, on the restructuring and resolution of credit institutions, to guarantee the full return of the nominal value of preferred shares and other hybrid instruments of capital and subordinated debt to savers and small investors without financial experience (corresponding to file numbers 125/000006/0000 of the XII Legislature and 125/000001/0000 of the XIII Legislature).

Follow this law

Source: Congreso de los Diputados, file 125/000001· updated 11 Nov

Automatic summary, not yet reviewed

  1. The bill would add a new provision to Law 9/2012 barring savings-type holders of hybrid instruments from management actions and giving them the right to recover everything they invested with no losses. A saver would include retail clients, non-professionals, and people who had never bought significant investment products before.
  2. To identify savers, credit institutions would have to hire an independent third party with proven reputation and training to review every current contract.
  3. Ongoing management actions would be suspended from the law's entry into force until it is decided who qualifies as a saver, possibly through arbitration. Those who already exchanged or converted their instruments into FROB Fondo de Reestructuración Ordenada Bancaria, the public fund that handled bank restructuring. shares could also recover what they invested, despite earlier decisions by the FROB's governing commission.
  4. Savers holding preferred shares or subordinated debt who also have a mortgage on their primary home with the same institution, and who cannot afford the payments, could not have the mortgage foreclosed until the invested amount is fully returned or they regain ability to pay.

Who it affects

  • Small savers and retail clients who bought preferred shares or other hybrid instruments.: They could recover all the money they invested with no losses.
  • Those who already exchanged or converted their instruments into FROB shares.: They could recover what they invested if they are recognized as savers.
  • Savers with preferred shares or subordinated debt and a mortgage on their primary home at the same institution.: The mortgage could not be foreclosed until they get their money back.
  • Credit institutions.: They would have to hire an independent third party to review all contracts.

Words worth knowing

Participaciones preferentes (preferred shares)
An investment product that is neither a share nor a deposit; buyers lost money when banks ran into trouble.
Instrumentos híbridos de capital o deuda subordinada (hybrid capital or subordinated debt instruments)
Financial products mixing features of shares and debt; when a bank has losses, their holders share the burden.
Acciones de gestión (management actions)
Measures to cut bank losses, such as converting these products into shares or imposing losses on holders.
FROB
Fondo de Reestructuración Ordenada Bancaria, the public fund that handled bank restructuring.
Arbitraje (arbitration)
A process where a third party decides a dispute without going to court.

It summarizes the text as it was introduced. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries

Where it stands

How far did it get?

It took 2 of 7 steps. It reached Admitted, and today it is unfinished.

  1. Introduced3 December 2019Someone registers the text in the Congreso.
  2. Admitted13 December 2019The Bureau of the Congreso accepts it and, for a members’ bill, the plenary decides whether to consider it.
  3. Amendmentsnot reachedGroups propose changes.
  4. Committeenot reachedA committee goes through the text in detail.
  5. Plenarynot reachedThe deputies vote, usually in the plenary; some laws are passed by a committee without going to it.
  6. Senatenot reachedThe Senate can pass it, amend it or veto it.
  7. BOEnot reachedThe King gives royal assent and it is published in the Official State Gazette (BOE). It comes into force on the date it sets, or after 20 days if it sets none.
See the 2 official steps on a timeline
Dec 201911. 3 December 2019: Presentación22. 13 December 2019: Calificación

Was there a plenary vote?

We have no plenary vote linked to this law in the Congreso’s data.

What happens next

What happens now?

The legislature ended before it finished. To go on, someone would have to introduce it again in the new Cortes.

It has not been presented again yet.

Sources

Where does all this come from?

  • The data comes from the open files of the Congreso, the Senate and the BOE, unaltered.
  • Each deputy’s province is the one of their seat on the day of the vote.
  • We only say “passed” or “rejected” when the majority needed is certain; otherwise we say which side had more votes.

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