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Corporate Updates 4-2013

03/24/2013
Commentaries

UPDATES CORPORATE 4/2013 ROYAL DECREE-LAW 6/2013, OF MARCH 22, 2013, ON PROTECTION FOR HOLDERS OF CERTAIN SAVINGS AND INVESTMENT PRODUCTS AND OTHER FINANCIAL MEASURES

1. INTRODUCTION

Royal Decree-Law 6/2013, of March 22, 2013, on protection for holders of certain savings and investment products and other financial measures was published in the Official State Gazette on March 23 and entered into force on March 24, 2013.

The essential aim of this piece of legislation, in the context of the so-called hybrid instrument (mainly preferred shares) and subordinated debt burden-sharing exercises envisaged in Law 9/2012, is twofold: (i) to monitor any claims filed by customers against financial institutions owned by the FROB (Fondo de Reestructuración Ordenada Bancaria), owing to the misselling of those complex products, and to make available in certain cases expeditious dispute settlement mechanisms, primarily through arbitration; and (ii) to provide, in exceptional cases, liquidity to the shares that the holders of those instruments will receive in exchange, considering that those shares will not trade on a regulated market, involving for that purpose the Deposit Guarantee Fund.

Moreover, in the additional and final provisions of the new royal decree-law, various financial provisions have been amended to meet different goals, for instance to comply with international commitments assumed by Spain, or to adopt measures required urgently (as they relate to the credit institution restructuring or resolution processes, or due to their particular significance in the present economic climate). A number of specific legal changes have also been made, affecting the Central Credit Register and allowing Spanish insurance companies to use underwriting agencies, along with certain changes to Law 9/2012, some relating to insolvency, to allow asset management company SAREB (Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria) to operate more effectively.

2. HYBRID CAPITAL INSTRUMENT AND SUBORDINATED DEBT MONITORING COMMITTEE

  • 2.1 Creation of the committee
  • 2.2 Composition and operating procedures of the committee
  • 2.3 Duties

3. LIQUIDITY MECHANISM FOR SHAREHOLDERS OF INSTITUTIONS UNDERGOING RESTRUCTURING

  • 3.1 Extension of remit of Deposit Guarantee Fund
  • 3.2 Contribution of funds

4. OTHER PROVISIONS OF ROYAL DECREE-LAW 6/2013

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