EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 5 June 2012  
on the reorganisation and sale of real estate assets in the financial sector  
(CON/20 12/46) 
 
Introduction and legal basis  
On 17 May 2012, the European Central Bank (ECB) received a request from Banco de E spaña, on behalf 
of the Spanish Secretary of State for Economic Affairs , for an opinion on Royal Decree Law 18/2012, on 
the reorganisation and sale of real estate assets in 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 the third and sixth indents 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 Royal Decree- Law relates to the role of Banco de España 
and contains rules applicable to financial institutions that materially influence the stability of financial 
institutions and m arkets. In accordance with the first sentence of Article  17.5 of the Rules of Procedure of 
the European Central Bank, the Governing Council has adopted this opinion.  
 
1.  Purpose of the Royal Decree- Law 
1.1 The Royal Decree -Law increases the provisioning m easures established for  non-troubled real estate 
assets under Royal Decree Law 2/2012 of 3 February  2012 on the reorganisation of the financial 
sector  (hereinafter the ‘RDL 2/2012 ’). The rate for generic provisions  was set at 7% and is now 
increased , as a one -off measure. The increase ranges from  7% to 45% , depending on the type of 
loan, i.e. loans secured by land, ongoing and finished developments and real estate related loans 
without security  interest . The provisions must be created with in the same time -frame as that 
established by RDL 2/2012, namely  before 31 December 2012, with an additional  12 months for 
credit institutions involve d in a restructuring process. Credit institutions must present a plan to 
Banco de España detailing the measures they intend to adopt to create the provisions  before 
11 June 2012. Banco de España can  then impose  additional measures, such as requiring a credit 
institution to request financial aid from the Fund for Order ly Bank Restructuring ( FROB ). 
 
                                                 
1  OJ L 189, 3.7.1998, p.  42.  
ECB -PUBLIC 
2 1.2 The Royal Decree- Law estab lishes the creation of asset management companies (AMCs) to which 
credit institutions must transfer all real estate assets which have been  foreclosed or received in lieu 
of payment i.e. properties, but not loans . Such transfer s must be completed before the end of 2012, 
with an additional 12 months for those institutions involved in a restructuring process. All banks 
are also required to transfer to their respective AMC assets which have been foreclosed or received 
in payment of debt after the end of 2012. The AMCs will be public limited companies without 
banking activit ies, and their purpose will be the management and disposal of real estate assets 
received. Assets have to be transferred at fair value or, if that value cannot be determined, 
according to book  value, net of the provisions  required under RDL 2/2012 and the Royal Decree-
Law. From 2013 onwards, the assets transferred will be valued on the basis of  the general method 
established in the Law on commercial companies, namely  an evaluation by an independent expert. 
The AMCs created by credit institutions that have received financial aid must make an annual 
disposal of  at least 5% of the ir assets to an unrelated third party. Likewise, credit institutions that 
have received financial aid will have a three year period to reduce their  stake in the AMCs to a 
non-controlling position.  
1.3 The Royal Decree- Law also contains some tax incentives to encourage the disposal of urban real 
estate assets, including  partial exemptions on corporate tax, income tax and non -resident income 
tax. 
 
2. General observations  
The ECB was  consulted on 17 May  2012 following  the approval of the Royal Decree- Law by the 
Government on 11 May  2012. This means that the ECB was  consulted on a law which is already in 
force  and not on ‘draf t legislative provision s’ as defined by Decision 98/415/EC . The ECB reminds 
the consulting authority of the importance of consulting the ECB at an appropriate point in time  in 
order to enable  the authority initiating the draft legislative provision s 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 for non- troubled real estate assets  
 The ECB welcomes this  measure as part of the general efforts taken by the Spanish Government to 
restore the confidence of investors and markets in the Spanish financial system . It is  in line with the 
previous provisioning exercise established in February 2012 under RDL 2/2012 and the increase of 
the core cap ital requirements  under Royal Decree  Law 2/2011 of 18 February 2011 on the 
strengthening of the financial system . In this context , the ECB takes note of the recently announced 
measure concerning the appointment of  (a) two external consulting firms to asses s the resilience of 
the Spanish bank s’ balance sheets, and (b) three audit firms to perform on -site work  on the 
                                                 
2  See Article 4 of Decision 98/415/EC.  
ECB -PUBLIC 
3 procedures for recognising and provisioning for impairment in Spanish banking groups ’ accounts.  
The ECB welcomes an  increase of generic provisions  for performing real estate assets, which 
forces the banks to build up effective buffers for this part of the ir portfolio s in view of the 
downturn of the cycle for such assets. The ECB understands that a further adjustment of the 
provisions may be the consequence of the results provided by external consulting and audit firms . 
The ECB also notes the scope of the Royal Decree- Law and that the provisioning measures 
concern only loan assets relating to land for real estate development and property construction  and 
not the rest of the bank s’ loan portfolios.  
3.2 Creation of AMCs  
 The ECB welcomes the proposed creation of AMCs  as a step in the right direction . Combined with 
the cre ation of provisions , this should  (a) contribute  to greater  transparency regarding  the real 
estate portfolios of Spanish banks , and (b)  enhance asset management processes in banks, thus 
decreas ing the potential for future losses . In addition, the creation of AMCs should create 
incentives for the sale of assets. It remains unclear , however, whether the envisaged framework is 
sufficient to achieve an effective separation of the risks  of banks. In addition, the Royal Decree-
Law is not very specific on how the AMCs  will be funded, and whether there might be any kind of 
Government guarantees  in place . Likewise, the economic rationale for an annual disposal rate of 
5% of assets transferred to AMCs , which are receiving support from the FROB , remains  unclear . In 
this regard, the ECB would recommend further steps towards a complete  deconsolidation and 
separation of risks between entities. However, t he ECB welcomes that  institutions that have 
received financial aid f rom the FROB will have to reduce their  stake in the AMC  within  three 
years.  
 
This opinion will be publishe d on the ECB’s website.  
  
Done at Frankfurt am Main,  5 June 2012.  
 
[signed]   
The President of the ECB  
Mario DRAGHI