FEDERACION ESPAÑOLA DE MUNICIPIOS Y PROVINCIAS
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Changed the legal status of savings banks
The Council of Ministers approved a Royal Decree-Law amending the legal regime of the Savings Banks. The text contains amendments affecting, inter alia, the representation of government and other entities ycorporaciones in the organs of government and establishes the incompatibility of elected politicians and senior officials to be members of these bodies.
According to the reference of the Council of Ministers, this reform, which preserves the social and general interests of the boxes and their foundational work is carried out by modifying Two laws: the Law on investment ratios, own resources reporting obligations of financial intermediaries, 25 May 1985 and the Act regulating the basic rules on Governing Bodies of Savings Banks, 2 August 1985.
The modification of the legal framework of the Savings Bank, which the Prime Minister presented to Congress on Dec. 2 as part of the Strategy of Sustainable Economy, is supported by the compromise reached between the Prime Minister and the Chairman of Popular Party to strengthen the Spanish financial sector and facilitate the flow of credit to the productive economy by acting on two key areas:
• The capitalization of the boxes, facilitating their access to resources of the highest category on the same basis as other banks.
• The professionalization of management and governing bodies of the Savings Banks.
Conditions of participations
The modification of the legal status of savings banks pursues a fundamental objective in terms of participatory assessments: to transform them into effective tools for the capitalization of these entities, facilitating access to private capital Banks. This requires on the one hand, make them attractive to potential investors and, secondly, to ensure compliance with the requirements for consideration as capital of the highest quality regulatory. The main changes are:
• Incorporation of political rights of share-holders in the governance of the Fund in proportion to the percentage of their stake in the assets (similar to shares in corporations).
• Liberalization of his regime now in effect removing the limits to the holding of shares by a single-participant fee and pay. It maintains a limit of 50 per 100 to the issuance of shares and establishes the principles of freedom of broadcast and pay fees
Corporate Governance of Banks
The governing bodies of the boxes are the General Assembly, the Board of Directors and Control Committee. Additionally, you create two new figures, the Social Work Committee and the Appointments and Remuneration Committee.
The most notable change in this area affects the representation of public administrations and institutions and corporations of public law in these organs of government of the boxes, which will now not exceed a whole 40% of the total rights vote, compared to 50 per 100 in force until now. Other changes affecting corporate governance are summarized below:
· Incompatibility of office of elected politicians and senior officials to be members of the governing bodies.
· Improving the professionalism and experience requirements for membership of governing bodies, for at least half of the members of the Governing Council shall meet special qualifications.
· Extension of the obligation of annual corporate governance report on all the savings banks.
· We provide enhanced majorities in the organs of government for the fundamental decisions of the Fund: the need for two-thirds majorities to approve changes to the legal nature of the entity.
New models of practice activity
The Royal Decree Law introduces new models of conduct of business by the entities. Any entity may:
a) To maintain its status as a savings bank, as now, with the new system of participatory assessments and adapting their laws to changes in corporate governance.
b) Engaging in an institutional system of protection (SIP).
c) To sell all of its financial business to a bank to maintain its status as a Fund. The social work and the industrial portfolio remain in the Fund.
d) Becoming foundation giving all their business as a credit institution to a bank in which it participates.
Improving systems integration Institutional Protection System (SIP)
• On the one hand, specifically regulates the SIP consists of savings banks. Its central body will have the nature of corporation and is owned by member Banks at least 50 per 100.
• If this limit is breached, the members of the SIP boxes should be converted into foundations with a disposal of its financial activity to the central unit of the SIP. In this case may be as many foundations as part of the SIP and a single bank.
• On the other hand, it reinforces the permanence and stability of the entities in the system by the Bank of Spain's capacity to assess, prior to the abandonment of an entity, the viability of the operation.
Strengthening solvency
With two goals:
a) To facilitate the adaptation to the criteria of solvency, liquidity and leverage in line with the future requirements of Basel III.
b) The Bank of Spain shall apply the new requirements weighting of the possibilities of access to "core capital" of each entity as its business model.
