Within the framework of the Single Supervisory Mechanism (SSM), the European Central Bank (ECB) oversees the entire banking sector in Spain. The ECB, in close cooperation with the Banco de España, carries out the direct supervision of significant institutions (SIs), whereas less significant institutions (LSIs) continue to be supervised by the Banco de España, in close cooperation with the ECB. However, the ECB can at any time decide to supervise any of these institutions directly to ensure the consistent application of high supervisory standards. The Banco de España also plays a critical role in consumer protection, anti-money laundering (AML) and terrorist financing issues.
Under the SSM Regulation, the decision to grant or withdraw authorisation of a subsidiary bank is taken directly by the ECB regardless of whether the institution concerned is an SI or LSI. The Banco de España ensures that all national legal requirements are met and submits a draft authorisation decision to the ECB. If the prospective subsidiary meets the legal requirements (relating to sufficiency of capital, suitable qualifying shareholders and management, as well as sound corporate governance, internal control and AML arrangements) authorisation is granted within six months of submission of the required documentation and/or within twelve months of receipt of the application. The authorised subsidiary is entitled to carry out permitted activities in any other European Economic Area (EEA) country (i.e. to passport out), either by opening a new branch or by providing cross-border services.
The Banco de España is responsible for the authorisation and supervision of branches of banks from non-EEA countries (non-EEA banks). The branch must be authorised by the Banco de España, which shall also be responsible for its supervision. The application must be submitted by the parent bank, the legal requirements being similar to those applying to subsidiaries. Under European Union regulations, a branch authorisation does not grant its holder any passporting rights.
The ECB authorises and supervises the internal models used by SIs, while the Banco de España approves and authorises those used by Spanish LSIs (in cooperation with the ECB). The Banco de España has the capacity to act in a flexible manner, as long as it abides by the SSM regulations and always maintains the rigour and technical soundness of the process.
