Banking Supervision

Memorandums of Understanding on supervisory matters

Memorandums of Understanding (MoU) on supervisory matters are agreements signed between different supervisory authorities establishing the terms of an agreement of cooperation and relationship between those authorities regarding regulated issues of common interest, such as: competencies for action, exchange of information, cooperation or the management of potential crises.
The Banco de España has signed several bilateral and multilateral MoUs with different Spanish and foreign authorities.

International bilateral MoUs within the EU

These agreements arose as a practical application of the rules of supervision, cooperation and communication established in the Second Banking Directive (Directive 89/646/EEC). Following the derogation of this directive, these agreements are currently contained in Directive 2013/36/EC (see articles 55 and following) and are, in principle, a mere development of this directive and as such, their scope of application was basically that of the branch offices. These MoUs were signed with those countries where, at that moment, there were branch offices which were of some importance to either of the two parties.

These MoUs specify how supervisors must notify each other in the event of branches being opened, detailing the content of the notice, and the cooperation in the supervision of liquidity and market risks; they also establish the reporting requirements of the host country supervisor, and they deal with the different aspects with respect to cooperation in the supervisory tasks.

The European Union (EU) countries which have signed are the following:

• Germany (1993)
• Belgium (1993)
• France (1993)
• The Netherlands (1994)
• Italy (1993)
• Luxembourg (1995)
• Portugal (1993)
• Romania (2010)

Additionally, to date various MoUs have been signed under article 115 of Directive 2013/36/EC  (currently incorporated into Spanish legislation under article 62 of Law 10/2014 ), in order to facilitate and establish effective supervision of European credit institution groups.

Other international bilateral memorandums of understanding outside the scope of the EU

The existence of Spanish banking groups conducting financial activities in non-European Union countries through local subsidiaries - and the possible inverse situation - entails the need for a better mutual understanding of both the banking system and the supervisory domain and for increasing the co-operation and exchange of information between the authorities entrusted with the prudential supervision in both countries for a better exercise of the respective responsibilities and tasks entrusted to them. With these objectives in mind and conforming to the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision (1997, revised in 2006 and 2012), the Banco de España has signed bilateral agreements with the supervisory authorities of non-European Union countries. These agreements explain, i.a., the reasons advising the arbitration of co-operation procedures, the general allocation of supervisory responsibilities between host and home supervisor, the minimum content for information sharing, the confidentiality provisions prevailing in each country, the criteria for the exercise by the home supervisor and, under exceptional circumstances, of in situ inspections of the subsidiaries, as well as aspects referring to technical co-operation, operational contacts and bilateral meetings.

The countries with which such agreements have been signed are the following:

Latin American:

• Argentina (1998)
• Brazil (2002)
• Chile (1998)
• Colombia (1998)
• Mexico (2000, including amendment in 2014)
• Peru (1998)
• Puerto Rico (2008)
• Uruguay (2005)
• Venezuela (1998)

Other non-EU countries:

• Andorra (2011)
• People's Republic of China (2006)
• Turkey (2013)
• United Kingdom (2019)
• United States of America (2008)
• United States of America (SEC) and CNMV (2021)
• Vatican City (2021)

National agreements

On a domestic level, the Banco de España has signed bilateral MoUs with the different sector supervisors pursuant to the terms laid down in the Law 44/2002 of 22 November 2002 on Measures to Reform the Financial System (currently under article 242 of the consolidated text of the Securities Market Law, approved by Royal Legislative Decree 4/2015, of 23 October). The purpose of these MoUs is to standardise the exchange of information on the respective control and supervisory tasks of financial institutions and to improve the efficiency, effectiveness and quality of supervisory procedures. The Banco de España has signed MoUs with the following national supervisors:

• National Audit Office on the control and supervision of the Official Credit Institution (22.09.2009).
• The Directorate General of Insurance and Pension Funds of the Ministry for Economic Affairs and Finance (12.03.2004).
• The National Securities Market Commission (01.06.2009).
• Commission for the Prevention of Money Laundering and Monetary Offences (2021)

Multilateral memorandums of understanding within the European Union

Among the efforts of the EU and more precisely of the European Central Bank to attain greater financial stability and to be able to develop the co-operation and co-ordination between the different financial authorities, both for the prevention and the resolution of potential crises, the signing of different co-operation agreements has been promoted, to which the Banco de España is party:

• Memorandum of understanding between financial supervisors, central banks and ministries of the economy of the European Union for cross-border financial stability (2008), extended to all European Economic Area countries in 2010.
• MoU on co-operation between the Banking Supervisors, Central Banks and Finance Ministries of the European Union in Financial Crisis situations (2005)
• Memorandum of understanding on high-level principles on co-operation between the banking supervisors and central banks of the European Union in crisis management situations (2003).
• Memorandum of understanding on the exchange of information among central credit registers for the purpose of passing it on to reporting institutions (2003).
• Memorandum of understanding on co-operation between payment system overseers and banking supervisors in stage three of economic and monetary union (2001).