Banking supervision

Since 4 November 2014 the Single Supervisory Mechanism is in charge of the supervision of the Spanish credit institutions as well as those from the rest of the Eurozone members. It’s a system headed by the European Central Bank involving the national supervisory authorities, like Banco de España.

The supervision model is based on four elements:

  • Effective and prudent regulation, with rules for accessing and carrying out the activity.
  • Continuous supervision of financial institutions, with receipt and analysis of periodic information and on-site inspections.
  • Corrective measures: Requirements and recommendations, restructuring plans; intervention or replacement of directors.
  • A disciplinary and sanctioning system which covers institutions and their directors.
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The Banco de España’s supervisory function

To promote the smooth functioning and stability of the financial system, the Banco de España is responsible for supervising credit institutions’ solvency, activity and compliance with banking rules and regulations.

This section explains why banking supervision is needed, its objectives, the model followed and its legal basis.

The Banco de España’s supervisory function shortcuts

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International supervisory activity

Considering the global environment in which Spain’s supervised banks operate, international coordination and cooperation are essential, both in banking supervision and banking regulation. With this aim in mind, the Banco de España participates in various international committees and fora and has promoted the signing of cooperation agreements with supervisory authorities in other jurisdictions.

International supervisory activity shortcuts

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Single Supervisory Mechanism

European Council Regulation (EU) No 1024/2013 established the Single Supervisory Mechanism (SSM), which comprises the European Central Bank (ECB) and the national competent authorities (NCAs) of the euro area countries – including the Banco de España – along with those of any other EU Member States that decide to opt into the system. Since 4 November 2014, the SSM exercises the full supervisory powers conferred upon it by the SSM Regulation, aiming to enhance the quality of microprudential supervision in the euro area, encourage market integration and boost confidence in the banking system.

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Supervised entities

Article 7(6) of Law 13/1994 of 1 June 1994 on the Autonomy of the Banco de España mandates the central bank to supervise the solvency, activity and compliance with the specific rules and regulations of credit institutions and of other financial institutions and markets whose supervision is entrusted to it by law. In the case of credit institutions, in the ambit of the SSM the Banco de España assists the ECB, which is responsible for the direct microprudential supervision of the institutions deemed significant, and performs the direct microprudential supervision of those deemed less significant. For all other supervised entities, the Banco de España has full autonomy over this function.

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