Banking Supervision

The aim of regulating the solvency of credit institutions is to ensure that these institutions operate with sufficient capital to be able to assume the risks of their financial activities, contributing to the stability of the financial system.

The basic regulations are established in Circular 3/2008  , which supplements Ley 36/2007  and Real Decreto 216/2008  . These regulations transpose the contents of European Directives 2006/48/CE  and 2006/49/CE into the Spanish legal system, and incorporate the credit institution solvency requirements established in the New Capital Accord, also known as Basel II  . , into the Community system.

These solvency requirements are applicable to consolidated groups of Spanish credit institutions and to individual credit institutions of Spanish nationality that are not part of a consolidated group. However, this scope of application has spread towards a lower level (which implies, exceptions notwithstanding, their further compliance at consolidated subgroup level and by each of the credit institutions, parent institutions and subsidiaries that comprise them) and towards a broader-based higher level (including insurance companies which are part of bancassurance groups and financial conglomerates). The branches of credit institutions in Spain authorised in other countries of the European Economic Area are subject to the regulation and supervision of their countries of origin.

Financial conglomerates, due to their institutional and operational features, are subject to additional solvency, reporting and supervision requirements, as well as those of the “coordinator supervisor”. The norma centésima vigésima cuarta de la Circular 3/2008  establishes out the reporting requirements of financial conglomerates and mixed groups which enable the solvency provisions established in Ley 5/2005 and Real Decreto 1332/2005  to be verified, which transpose the stipulations in Directiva 2002/87/CE  . into the Spanish legal framework.

Lastly, it should be noted that credit institutions must have sound corporate governance procedures and appropriate internal control systems, as stated in norma centésima quinta de la Circular 3/2008  , which implements artículo 22 y el anexo V de la Directiva 2006/48/CE  .