Press room

Objectives and scope of supervision

• What are the core objectives of the Banco de España's prudential banking supervision of credit institutions? What is the Banco de España's relationship with the regulators of the insurance sector and the securities market?

  The basic purpose of banking supervision is to safeguard the stability of the financial system by overseeing the institutions' solvency and compliance with specific regulations. This does not mean that mismanaged or inefficient credit institutions do not exist (in which case, market discipline must intervene) but that the Banco de España must endeavour to minimize the effects of a possible individual banking crisis.

  From this perspective, the supervisory function of the Banco de España consists of designing and applying analysis and verification systems which provide up-to-date information on the situation of institutions and their risk profile. This information is used to decide on the relevant measures to be adopted in order to prevent possible crises or reduce their number, importance and cost.

  Furthermore, the Banco de España must ensure compliance with specific banking regulations, including those regarding transparency and customer protection.

  When performing its supervisory functions, the Banco de España works closely with other supervisory authorities that work in the areas of securities (National Securities Market Commission) and insurance (Directorate General for Insurance). The Banco de España also collaborates with the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences, the authority that ensures compliance with the regulations covering these areas. It should also be noted that Spain's regional governments are responsible for certain aspects of the operations undertaken by savings banks and credit unions.

• What kinds of institution are subject to the supervision of the Banco de España and under what conditions?

  The Law on Banking Discipline and Intervention entrusted the Banco de España with the mission of inspecting and controlling credit institutions and their consolidated groups (the supervisory competences of the Banco de España also extend to their overseas branches). The Banco de España also supervises the activity in Spain of branch offices belonging to foreign credit institutions, although in the case of branches of institutions from EU countries, its powers are limited to controlling branch liquidity and compliance with regulations of general interest.

  At 31 December 2011, the Banco de España was supervising 477 entities, of which 336 were credit institutions (80 banks, 35 savings banks -29 of which were carrying on their activity indirectly through a bank-, 76 credit unions, 86 branches of foreign institutions, and 59 credit financial institutions).

  Aside from credit institutions, the Banco de España supervises 25 mutual guarantee and reguarantee companies, 14 currency exchange and transfer establishments, 58 appraisal companies, 43 payment institutions and 1 e-money institution.

• What is the Basel Committee on Banking Supervision?

  The Basel Committee was created by the central bank governors of the Group of Ten in 1974. The Banco de España has been a full member since 2001.

  Their meetings in full session, which are held four times a year, are attended by representatives of national supervisory authorities when this function has not been conferred on the respective central banks.

  The Committee does not have formal supervisory authority at a supranational level, and therefore its conclusions do not carry the force of law. However, these conclusions are delivered in the form of recommendations and guidelines which, although not legally binding, are put into practice by supervisory authorities on a national level, thereby creating an international convergence without the need for detailed harmonization.

  For more information, please visit the following link: Basel Committee on Banking Supervision.

• Does the Banco de España have to authorize the purchase of shareholdings in credit institutions?

  Any legal or natural person wishing to directly or indirectly acquire a significant shareholding in a credit institution must first notify Banco de España of the details of the transaction. For these purposes, a significant shareholding is understood as that which represents 10% or more of the share capital or of voting rights, or smaller holdings that nevertheless enable the exertion of significant influence over the organization, determined as such when the owner is able to appoint or dismiss any member of the governing body.

  The Banco de España should also be informed of plans to increase a significant shareholding in such a way that the share capital or voting rights may equal or exceed one of the following thresholds: 20%, 30% or 50%.

  The obligation to inform the Banco de España also extends to any acquisition which would give the buyer control of the credit institution.

  The Banco de España has a maximum of three months in which to oppose the intended acquisition.

  Furthermore, any legal or natural person who has directly or indirectly acquired a shareholding of more than 5% in a credit institution, must send a written notification to the Banco de España and to the institution in question, stating the percentage of the shareholding.

• Can information be obtained from the Banco de España regarding the financial position of a specific credit institution?

  The Banco de España is bound by law to treat as confidential the information it obtains from credit institutions in the course of its supervisory tasks, and can only disclose aggregated information on the performance of the sector as a whole.

• What relations does the Banco de España have with Latin American central banks?

  In addition to actively participating in all international supervisory forums, the Banco de España places special emphasis on its relations with Latin America. Over the last few years it has significantly increased its contacts with the banking supervisors of these countries, and has signed bilateral memorandums of understanding on supervision with the majority of Latin American supervisory authorities.