EN ECB-PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 15 February 2012 
on the reorganisation of the Spanish financial sector 
(CON/2012/11) 
 
Introduction and legal basis  
On 2 February 2012, the European Central Bank (E CB) received a request from the Deputy Minister for 
Economic Affairs and Competitiveness for an opinion on Royal Decree-Law 2/2012 on the Reorganisation of the financial sector (hereinafter the ‘Royal Decree-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 European Union and on the thir d and sixth indents of Article 2(1) of Council 
Decision 98/415/EC of 29 June 1998 on the consu ltation of the European Central Bank by national 
authorities regarding draft legislative provisions
1, as the Royal Decree-Law relates to the Banco de 
España and to rules applicable to financial institutions  insofar as they materially influence 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 Bank, th e Governing Council has adopted this opinion. 
 1.  Purpose of the Royal Decree-Law 
The Royal Decree-Law is primarily aimed at addressing market concerns over the valuation of real estate 
assets to which credit institutions and consolidated groups of credit institutions  have large exposures 
through loans to real estate developers and repossesse d assets. It provides for the ‘cleaning-up’ of bank 
balance sheets by increased (generic and specific) provisioning combined with a requirement for an 
additional capital buffer on impaired assets. The to tal amount to be provisioned is estimated at 
EUR 50 billion. 
The Royal Decree-Law is also aimed at promoting c onsolidation of the sector to strengthen profitability 
and to eliminate overcapacity, encouraging as much as possible private solutions in the consolidation 
process. In this context, entities involved in a merger  will have to present a viability plan and corporate 
governance measures that allow for quick and efficient integration; additionally, they must commit to 
increasing the number of loans granted to the priv ate sector. In this regard, the Royal Decree-Law 
introduces operational changes to the Fund for Orde rly Bank Restructuring (FROB) by enabling it to 
provide financing through conver tible bonds in the merger process. The FROB’s own resources are 
increased from EUR 9 billion to 15 billion. 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
ECB-PUBLIC 
2 The Royal Decree-Law strengthens corporate governance of savings banks that indirectly exercise their 
financial activity by simplifying their legal framewo rk, with management remuneration limits for the 
institutions assisted by public funds.  
Finally, the Royal Decree-Law streamlines the pro cedures for mobilising collateral in favour of the 
Eurosystem. Following the Royal-Decree Law, two significant changes can be introduced in the 
Eurosystem collateral management procedures. As re gards marketable securities, besides the current 
method of earmarking, counterparties could create ple dges by transferring the relevant securities to a 
dedicated securities account of the beneficiary, in  line with the collateral management procedures 
currently used within the Eurosystem. As regards cr edit claims, the Royal Decree-Law sets the basis for 
counterparties to create valid security interest s over credit between the parties by merely including the 
relevant credit claims in a list submitted to the colla teral taker. The Royal Decree-Law expressly clarifies 
that the express consent of the guarantor or the debt or of the credit claims granted as collateral is not 
required for the valid creation of the security.  
 2. General observations  The ECB only received the consultatio n request on 2 February 2012, a lthough the Royal Decree-Law was 
approved by the Spanish Government  on 3 February. The consultation request did not state the dates of 
approval by the Government or validation by the Par liament, nor did it establish a specific time limit. As 
underlined in several ECB opinions, Article 3 of  Decision 98/415/EC provides that the consulting 
authorities may set a time limit for the submission of an ECB opinion, but it may not be less than one month, unless a shorter time limit is justified with reasons for the extreme urgency. The ECB reminds the 
consulting authority of the importance of consulting th e ECB at an appropriate point in time ‘enabling the 
authority initiating the draft legislative provision to  take into consideration the ECB’s opinion before 
taking its decision on the substance’
2. 
 3. Specific comments 3.1 Rules regarding the one-off increase in  provisioning and capital buffers 
Title I of the Royal Decree-Law aims at addressi ng banks’ impaired exposures to land and real estate 
under development in Spain through increased provi sions and additional capital buffers for those 
exposures. The assets concerned are those classified as doubtful, substandard or foreclosed. It also 
requires banks to provision against the performi ng (normal) exposures to the abovementioned assets. 
These measures are broadly welcomed by the ECB as strengthening the resilience of the Spanish banking 
sector at the current juncture while limiting the scope for public intervention. In this context, the ECB has 
two observations. First, in the current situation in th e Spanish real estate market , where market activity is 
very low or even non-existent in some segments, it is appropriate to apply the same treatment of the 
valuation of real estate properties across the market to ensure simplicity and transparency of valuations; 
                                                 
2  See Article 4 of Decision 98/415/EC. 
ECB-PUBLIC 
3 however, once market activity recovers, market values should be applied for valuing real estate assets and 
collateral.  
Second, the new measures apply to the classified asse ts as of end-December 2011 and need to be fulfilled 
by banks by end-2012, and, for some credit instituti ons involved in merger processes, by 2013. The ECB 
recommends providing additional guidance in order to  avoid ambiguity as to how the provisioning and 
capital buffers should be made for those classified asset s that may be recovered or disposed in 2012 or in 
the following period, if the measures are extended.  
3.2 Integration process and corporate governance of savings banks 
The ECB welcomes the implicit incentives provided by  the Royal Decree-Law for banks to engage in 
further integration activity through: (a) an extension of the deadline to comply with the new provisioning 
requirements; and (b) a possibility to  obtain financing from the FROB to  facilitate the integration process. 
The Royal Decree-Law also contains a requirement for those banks that opt for public support via the 
FROB to further improve their corporate governance, which is aimed at improving the professionalism and dedication of the members of their decisi on-making bodies. The ECB generally supports the 
measures while highlighting that mergers only amo ng the weaker institutions might limit the overall 
benefits of the reform.  
3.3 Rules regarding the posting of collat eral in favour of the Eurosystem 
The Royal Decree-Law updates the wording of th e sixth additional provision of Law 13/1994 of 
1 June 1994 on the Banco de España ’s autonomy, which contains the rules on creating and enforcing 
security interests granted in favour of the Banco de España, the ECB and Union central banks in general. 
The ECB welcomes this initiative, as it will enha nce legal certainty and will increase operational 
efficiency, streamlining the procedures for the posting of collateral in favour of the Eurosystem. These 
streamlined procedures for mobilising collateral in a more timely and efficient manner will amplify the 
operational capacity of the Spanish counterparties while , at the same time, preserving the protection of the 
Banco de España and, more ge nerally, of the Eurosystem from incurring losses when conducting credit 
operations with them. Moreover, the alignment of the procedures for the  mobilisation of collateral with 
those applied in other Member States is regarded as a step forward in ensuring an equal level playing field 
for counterparties across the euro area.  
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 15 February 2012. 
[signed] 
 
The Vice-President of the ECB 
Vítor CONSTÂNCIO