EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 2 December 2008  
at the request of the Spanish State Secretary for Economic Affairs 
on a draft royal decree on the arrangements for paying the Banco de España’s profits to the 
Treasury 
(CON/2008/82) 
 
Introduction and legal basis  
On 5 November 2008 the European Central Bank (E CB) received a request from the Spanish State 
Secretary for Economic Affairs for an opinion on a draft Royal decree on the arrangements for paying the 
Banco de España’s profits to the Treasury (hereinafter the ‘draft decree’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the third indent 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 decree relates to the Banco de España. In accordance with the first sentence of 
Article 17.5 of the Rules of Procedure of the Eur opean Central Bank, the Governing Council has adopted 
this opinion. 
 1.  Purpose of the draft decree 
The draft degree is intended to improve the operation and legal certainty of the current payment scheme 
by deferring the first payment of the Banco de Espa ña’s profits to December and giving the scheme 
unlimited validity now that the ECB’s transitional pe riod regarding the provisions on monetary income 
distribution
2 is over. 
 2. General observations  Spain has consulted the ECB on the arrangements fo r paying the Banco de España’s profits to the 
Treasury on three previous occasions
3. The technical modifications proposed in the draft decree do not 
affect the substance of the current scheme. The pa yment schedule for profits accrued to the Banco de 
España, recorded in its accounts and paid to the Treasury is proposed as follows: 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Decision ECB/2001/16 of 6 December 2001 on the allocation of  monetary income of the national central banks of 
participating Member Status from the financ ial year 2002 (OJ L 337, 20.12.2001, p. 55). 
3  ECB Opinions CON/2005/30 of 11 August 2005, CON/2002/14 of 25 April 2002 and CON/99/16 of 28 October 1999. 
Available on the ECB’s webs ite at www.ecb.europa.eu.  
2 – on the first working day of December of each year, 70% of the profits accrued and recorded until 
30 September of the same financial year, while th e foreseen development of the results until year-
end is also taken into consideration; 
– on the first working day in March in the next y ear, 90% of the profits accrued and recorded until 
31 December of the preceding financial year, less the instalment paid in December; 
– the remaining profits following approval by the Council of Ministers of the Banco de España’s 
annual accounts for the financial year. The Council of  Ministers, on a proposal from the Banco de 
España, may also authorise the exclusion of certa in profits from the interim distribution rules.  
 3. Specific observations 3.1 Deferral to December of the first payment of profits to the Treasury  
 The ECB welcomes the proposed deferral, from Nove mber to December, of the first payment of 
the Banco de España’s profits to the Treasury. It will bring the estimation of year-end results closer 
to the end of the year. 
3.2 Financial independence 
The distribution of provisional profits before the end of the year entails the need to carefully 
consider the Banco de España’s role in the d ecision-making process for profit distribution. The 
concept of financial independence should be asse ssed from the perspective of whether any third 
party is able to exercise either direct or indi rect influence not only over the tasks of a national 
central bank (NCB) but also over its ability, unde rstood both operationally in terms of manpower
4, 
and financially in terms of appropriate financial resources, to fulfil its mandate. The NCBs must 
also, at all times, have sufficient financial means to  carry out their other functions, i.e. to perform 
their national tasks, to meet their international obligations and properly cover their administrative 
and operational expenses. It shou ld be noted that Articles 28.1 and 30.4 of the Statute of the 
European System of Central Banks and of the European Central Bank (hereinafter the ‘ESCB 
Statute) provide for further calls on the NCBs to make further contributions to the capital of the 
ECB and to make further transfers of foreign r eserves. The principle of financial independence 
requires that compliance with these provisions l eaves an NCB’s ability to perform its functions 
unimpaired. With regard to profit allocation, an NCB’s statutes may prescribe how profits are to be allocated. In the absence of such provisions, the d ecision on allocation of profits should be taken by 
the NCB’s decision-making bodies on professional grounds, and should not be subject to the 
discretion of third parties unless there is an expr ess safeguard clause stating that this is without 
prejudice to the financial means necessary for carry ing out the NCB’s tasks related to the European 
System of Central Banks (ESCB). In this regard , the ECB notes that under Article 1 of the draft 
decree, and also under Royal Decree 1198/2005, th e Banco de España adopts the prepayment 
                                                 
4  See ECB Opinion CON/2008/9 of 21 February 2008 at the requ est of the German Ministry of Finance on a draft law 
amending the Law on the Deutsche Bundesbank; also ECB Opinion CON/2008/10 of 21 February 2008 at the request of 
the Italian Ministry of Economic Affairs and Finance on some  provisions of the Law on the State annual and pluriannual 
budget (2008 Budget law).  
3 agreement and the estimation of year-end results and proposes which part of its profits should be 
excluded from payment to the Treasury. The ECB unde rstands that these rules grant the Banco de 
España the right to create provisions, thereby enab ling it to build up financial reserves that should 
help to guarantee the availability of appropria te independent financial means to meet its 
obligations. Moreover, the ECB understands that the a pplication of such rules, and the level of the 
provision, has ensured such availability of indepe ndent financial means, and the ECB considers it 
important that it continues to do so. Furthermore, regarding Article 1(2) of the draft decree and the 
Banco de España’s proposal to ex clude some profits from provisional payment, the ECB considers 
that the authorisation of such exclusion by th e Council of Ministers shoul d be limited and should 
avoid any exercise of discretion in this context.  
3.3 Monetary financing  
Given the primacy of Community law, it is important to note that the application of the ESCB 
Statute may not be conditional on the provisions of national law. In particular, the draft decree must 
comply with the monetary financing prohibition laid down in Article 101(1) of the Treaty and 
Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the 
application of the prohibitions referred to in Articles 104 and 104b (1) of the Treaty5. This 
Regulation prohibits overdraft facilities or any othe r type of credit facility with the ECB or the 
NCBs of Member States in favour of Community  institutions or bodies, central governments, 
regional, local or other public authorities, othe r bodies governed by public law, or public 
undertakings of Member States, and the purchase directly from these public sector entities by the 
ECB or NCBs of debt instruments.  
In order to comply with the monetary financing prohibition, it is of crucial importance that the 
distribution of profits by instalments does not impl y advances on future or provisional profits but is 
rather the result only of profits that are fully r ealised, accounted for and audited, which in turn 
requires due calculation of profits and losses. In this  context, it appears necessary to have formal 
approval of the profit and loss account for the cons idered period before the distribution of profits. 
Although a ceiling of 70 % of profits for the first payment provides some safeguard, it could theoretically not be sufficient if, for instance, heavy losses at year-end exceeded 30 % of the profits 
realised in the first nine months of the financial year
6. In this regard, the risk of insufficient 
coverage of losses at year-end is reduced by deferring the first payment from November to 
December. In this context, the ECB understands that the Governing Council of the Banco de 
España will assess the amount to be deducted from the first payment on the basis of information 
known in December related to the profits for the great er part of the year (11 months out of 12). The 
Governing Council of the Banco de España should apply th is arrangement prudently to ensure that 
                                                 
5  OJ L 332, 31.12.1998, p. 1. 
6   In paragraph 6(ii) of CON/99/16 the ECB stated that the draf t ‘would better satisfy this concern by providing for a formal 
approval by the Governing Council of Banco de España of th e profits and loss account which serves as a basis for the 
calculation of the advance pay ou ts, and the pay out be conditioned to an asse ssment by that body that expected economic 
developments for the final quarter of the year  would not give rise to such a risk.’  
4 it does not result in any advance profit distributi on to the Treasury, since that would constitute 
credit to the public sector, and thus be cont rary to the monetary financing prohibition. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 2 December 2008. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET