Opinion of the European Central Bank of 23 July 2013 on savings banks and banking foundations (CON/2013/52)
Date: 2013-07-23
Institutions: European Central Bank
Subjects: Spain, banking supervision, credit institution, financial stability, foundation, national law, savings bank

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 23 July 2013 

on savings banks and banking foundations 

(CON/2013/52) 

Introduction and legal basis 

On 2 July 2013, the European Central Bank (ECB) received a request from the Spanish Secretary of State 

for Economic Affairs 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  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  draft  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, 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  draft  law  regulates  redefines  the  composition  of  the  savings  banks  sector  and  regulates  the 

governance of the institutions which form part of it. In particular, ‘savings banks’ will be strictly 

limited in terms of geography and size. If a savings bank exceeds these limits: (a) it will have to 

transfer  all  equity  allocated  to  its  financial  activity  to  another  credit  institution  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 will lose their banking licence. The draft law provides a period of six 

months for the conversion of savings banks into foundations. As regards the savings banks that are 

already  acting  indirectly  through  a  commercial  bank,  they  will  be  transformed  into  a  banking  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 Autónoma) in which they are established.  

1.1.2  Under the Memorandum of Understanding on Financial-Sector Policy Conditionality2 (hereinafter 

the ‘MoU’) between Spain and the European Commission of 23 July 2012, the Spanish authorities 

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2  

OJ L 189, 3.7.1998, p. 42. 
Available on the Commission’s website at www.ec.europa.eu. 

 
 
 
 
                                                 
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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  independence  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  not  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 constraints on the savings bank business model. In order to avoid a savings bank 

reaching 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  market  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  the  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 strengthened regime 

laid down in the draft law. As for corporate 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  foundations  must  submit  an  annual  corporate 

governance report to their supervisor. 

3  

MoU, Annex 2, measures 18 and 20. 

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1.4.2  The  draft  law  limits  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 financial 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 

diversification  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  monitor  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 

serious 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 complies with the commitments made by the Spanish authorities under the MoU. The reform 

addresses 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 stability 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 is 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 revert to a traditional savings bank model by 

limiting the territorial scope and size of savings banks, as it also contributes to avoiding that they become 

systemic.  In  this  direction,  the  ECB  notes  that the activity  of  savings  banks  will  be  focused  mainly  on 

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attracting 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, in particular, how effective the 

structure  of  incentives  laid  down in the  draft law  is  in  terms  of  ultimately  achieving  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 management 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 general 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 and 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 website. 

Done at Frankfurt am Main, 23 July 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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