EN ECB -PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 23 July 2013  
on savings banks and banking foundations  
(CON/20 13/52) 
 
Introduction and legal basis  
On 2 July 2013 , the European Central Bank (ECB) received a request from the Spanish Secretary of State 
for Economic Af fairs and Business Support for an opinion on a draft law on savings banks and banking 
foundations  (hereinafter the ‘draft law’).  
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the Europ ean Union and the third and sixth indent s of Article  2(1) of Council Decision 
98/415/EC of 29  June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions1, as the draft law relates to the Banco de España and to rules 
applicable to financial institutions insofar as they materially influenc e the stability of financial institutions 
and markets . In accordance with the first sentence of Article  17.5 of the Rules of Procedure of the 
European Central Ba nk, the Governing Council has adopted this opinion.  
 
1.  Purpose of the draft law 
1.1 General  scheme and content of the draft law  
1.1.1  The d raft law  regulates redefines the composition of the savings banks  sector  and regulates the 
governance of the instit utions which form  part of it . In particular, ‘savings banks ’ will be strictly 
limited in terms of geograph y and size. If a savings bank exceed s these limits : (a) it will have to 
transfer all equity  allocated to its financial activity to another credit inst itution in exchange for 
shares therein ; and ( b) it will be converted into a ‘banking foundation ’ if its stake in that other  
credit institution  is significant , otherwise it will be converted into an ‘ordinary  foundation ’. In 
either case, the foundations wil l lose their  banking licence . The draft law provide s a period of six 
months for the conversion of savings banks into foundations . As regards the saving s banks that are 
already acting indirectly through a commercial bank , they  will be transformed into a ban king or 
ordinary foundation, as applicable , within one year from the entry into force  of the law . Finally, it 
is noted that the draft law states  the basic regime for savings banks , without prejudice to the regime 
applying to them by the region ( Comunidad A utónoma ) in which they are established .  
1.1.2  Under t he Memorandum of Understanding on Financial -Sector Policy Conditionality2 (hereinafter 
the ‘MoU ’) between Spain and the European Commission o f 23 July 2012, the Spanish authorities 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Available on the Commission’s website at www.ec.europa.eu.  
ECB -PUBLIC  
2 committed to: (a) strengthen fit and proper rules for the governing bodies of savings banks and 
introduce incompatibility requirements regarding the governing bodies of the savings banks and the 
commercial banks controlled by them ; and ( b) clarify the role of savings banks in their capacity as 
shareholders of credit institutions with a view to eventually reducing their stakes to non -controlling 
levels3. 
1.1.3  In accordance with the commitments of the Spanish authorities under the MoU, the draft law 
increases the levels of indep endence and required experience of the members of the governing 
bodies of both savings banks and banking foundations , including in some instances the requirement 
of professionalism . Members of these governing bodies  may n ot hold executive  positions in  
political parties, trade unions and employers’  associations  or be elected representatives or senior 
officials of government . Also in accordance with the MoU, the draft law  lays down a set of 
negative incentives for the eventual reduction of banking foundations ’ stakes in credit institutions 
to non -controlling levels.  
1.2 Savings banks  
The draft law imposes constrain ts on the savings bank business model. In order to avoid a savings bank  
reach ing a systemic size, the following limitations are imposed: ( a) they may only operate in the territory 
of an autonomous region or a maximum of 10 neighbouring provinces; ( b) they will not be authorised to 
exceed a certain volume of activity , i.e. the total assets must not exceed EUR  10 billion or its share of the 
deposits mar ket must not exceed 35 % of the  market in which it operates . Corporate governance  is 
reinforced , as only 25  % of the members of the General Assembly may be appointed by government 
authorities and public -law entities and corporations , and the majority of th e members of the Board of 
Directors will be independent .  
1.3 Ordinary foundations  
Savings banks that exceed the limits  for savings banks  laid down in the draft law but do not have a stake 
in a credit institution of at least 10  % of its capital , nor voting  rights that allow them to appoint or remove 
a member of its governing body , will have to be converted into ordinary foundations. Conversely, an 
ordinary foundation acquiring such a stake in a credit institution will have to be converted into a banking 
foundation.  Ordinary foundations will be governed in accordance with the legislation on foundations.  
1.4 Banking foundations  
1.4.1  This is a new  concept  introduced by the draft law. A banking foundation is a  foundation that has a 
stake in a credit institution  of at least 10  % of its capital or voting rights which allow the 
appointment or removal of a member of its governing body . Its purpose  is to carry out its charitable 
and community work  and to manage its stake in the credit institution  under the strengthen ed regime 
laid down in the draft law. As for c orporate governance, only 25  % of the members of the Board of 
Directors of a banking foundation ( patronos ) may be designated by government authorities and 
public -law entities and corporations . Banking foundatio ns must submit an annual corporate 
governance report to the ir supervisor.  
                                                 
3  MoU, Annex 2, measures 18 and 20.  
ECB -PUBLIC  
3 1.4.2  The draft law li mits the influence of a banking foundation in the relevant credit institution by 
making membership of the governing body of the banking foundation incompatible with the 
holding of an equivalent position in the credit institution; by subjecting dividend distributions in the 
controlled credit institution to increased quorum and majority requirements, and by depriving 
banking foundations with a controlling stake of voting rights in some special cases.  
1.4.3 Under the draft law, holding a  highly  significant stake (at least 30%) in a credit institution will 
carry with it significant burdens, e.g. obligations to prepare a stake management protocol and an 
annual financi al plan, and submit them to Banco de España.  
1.4.4 Likewise, holding controlling stakes (at least 50% or effective control) in a credit institution will be 
costly because of the obligation to prepare , further to the financial plan,  an investment 
diversifi cation and risk management plan and to create a reserve fund to provide for possible 
capital shortfalls of the controlled credit institution. The financial plan will specify the minimum 
contributions needed in order to reach the target level determined by the Banco de España; taking 
into account, inter alia , the capital needs of the credit institution as laid down in the financial plan, 
the risk -weighted assets of the credit institution and the stake held by the banking foundation in that 
credit institution . The banking foundations with controlling stakes will not be able to exercise the 
voting rights corresponding to the part of the acquired capital allowing them to maintain a stake of 
at least 50  % or effective control.  
1.4.5 The Banco de España will moni tor compliance with the obligations regarding the stake 
management protocol, the financial plan, the investment diversification and risk management plan 
and the reserve fund. Non -compliance with these obligations will be treated as a serious or very 
seriou s breach.  
 
2. ECB assessment  
2.1 General consideration  
The ECB welcomes the Spanish Government’s initiative to reform the Spanish savings bank sector , 
which also compl ies with the commitments made by the Spanish authorities under the MoU . The reform 
addres ses several shortcomings of the governance of Spanish savings banks, which , among several other 
factors,  contributed to some extent to the financial sector crisis in Spain , and is therefore an important 
pillar of the overall effort to rebuild financial sta bility in Spain . The ECB considers  the period of one year 
given to the saving banks which currently exercise their activity indirectly , through a commercial bank , as 
adequate  to the purpose . Given the importance and complexity of the reform , the ECB i s of the opinion 
that the relevant authorities will need to closely monitor the effectiveness of the reform  once it is 
implemented  and be ready to consider a review if needed . 
2.2 Savings banks  
The ECB welcomes the Spanish Government’s initiative to re vert to a traditional savings bank model  by 
limiting the territorial scope and size of savings banks , as it also contributes to avoiding that they  becom e 
systemic.  In this direction, t he ECB notes that the activity of savings banks will be focused mainly on 
ECB -PUBLIC  
4 attract ing reimbursable funds and providing banking services and investment services to retail clients and 
small and medium companies.  
2.3 Banking foundations  
The ECB also welcomes the new legal concept of banking foundation  and the regulation thereof under the  
draft law , in line with the financial sector conditionality agreed in 2012 with the European partners and 
the International Monetary Fund. Time will be needed in order to confirm, i n particular , how effective the 
structure of incentives laid down in the dra ft law  is in terms of  ultimately achiev ing the divestment by 
banking foundations of controlling stakes in credit institutions  or, for banking foundations choosing to 
retain their controlling stakes, how effective the enhanced obligations provided for in the draft law  are in 
order to guarantee sound and prudent management by banking foundations of credit institutions  under 
their control. In this respect, the ECB observes that the draft law empowers the Banco de España to 
specify the minimum content of the ma nagement protocol, as well as  relevant aspects of the investment 
diversification and risk management plan and of the reserve fund, including its target size . Regarding the 
latter, the ECB welcomes that the Banco de España’s decision will be based on genera l criteria that take 
into account the situation of the individual institutions concerned , including : (a) the level of capital needs 
of the credit institution according to the financial plan; (b) the value of risk -weighted assets of the credit 
institution a nd the size of the banking foundation’s stake  in it; (c) whether the credit institution’s shares 
are listed ; (d) the level of concentration of the banking foundation’s investments in the financial sector.  
 
This opinion will be published on the ECB’s websit e. 
 
 
Done at Frankfurt am Main, 23 July 2013 . 
 
[signed]  
 
The President of the ECB  
Mario DRAGHI