ROYAL DECREE 256/2013, OF APRIL 12, 2013, INCORPORATING THE CRITERIA OF THE EUROPEAN BANKING AUTHORITY OF NOVEMBER 22, 2012 ON THE ASSESSMENT OF THE SUITABILITY OF MEMBERS OF THE MANAGEMENT BODY AND KEY FUNCTION HOLDERS INTO THE LEGISLATION ON CREDIT INSTITUTIONS
Royal Decree 256/2013, of April 12, 2013, incorporating the guidelines of the European Banking Authority dated November 22, 2012 on the assessment of the suitability of members of the management body and key function holders into the legislation on credit institutions and other financial institutions, was published in the Official State Gazette on April 13, 2013 and came into force the day after.
Although the European Banking Authority’s nonbinding guidelines refer only to credit institutions, it was decided, for the sake of consistency with the rules on reputation and experience hitherto in force, to make the new legislation applicable to a broader spectrum of financial institutions which, in addition to credit institutions, takes in electronic money institutions, payment institutions, appraisal companies, counter-guarantee companies, foreign currency exchange establishments and mixed financial holding companies.
This has been done by amending the following pieces of legislation (i) Royal Decree 1245/1995, of July 14, 1995, on the creation of banks, cross-border activity and other matters relating to the legal regime for credit institutions; (ii) Royal Decree 84/1993, of January 22, 1993, implementing Law 13/1989, of May 26, 1989, on Credit Cooperatives; (iii) Royal Decree 692/1996, of April 26, 1996, on the legal regime for credit financial institutions; (iv) Royal Decree 775/1997, of May 30, 1997 on the legal regime for the approval of appraisal services and companies; (v) Royal Decree 2660/1998, of December 14, 1998, on foreign currency exchange; (vi) Royal Decree 1332/2005, of November 11, 2005, implementing Law 5/2005, of April 22, 2005, on the supervision of financial conglomerates; and (vii) Royal Decree 712/2010, of May 28, 2010 on the legal regime for payment services and payment institutions.
Because the Bank of Spain is the only organization with the power to authorize the financial institutions subject to this legislation (following the amendment made by Law 9/2012 of November 14, 2012, on the restructuring and resolution of credit institutions) –not the Ministry of the Economy, as was previously the case–, it will be the Bank of Spain that is responsible for assessing the suitability requirements in terms of reputation, experience and good governance. As we shall see below in greater detail, Royal Decree 256/2013 makes material amendments in three basic areas:
(i) The commercial and professional reputation of the officials subject to this legislation.
(ii) Experience requirements, which also takes in theoretical training and the assessment of suitability in the management body as a whole.
(iii) Broader, more demanding, good governance rules, particularly, in relation to conflicts of interest.
The new legislation has broadened, generally, the current suitability levels required to carry on the functions of director and general manager and equivalent officials. They have been extended to apply, for the first time, to those responsible for internal control functions and other key positions at the institution and at its parent company, according to what the Bank of Spain may determine. It also contains a transitional regime for the authorization procedures that have already started and for adaptation of existing institutions to the new legislation.
The Bank of Spain has also been conferred the power to authorize amendments to credit institutions’ bylaws, in keeping with the earlier transfer made by Law 9/2012, to the supervisor of the power to authorize credit institutions.
2. REPUTATION CRITERIA
2.1. Professional history
2.2. Convictions for crimes or misdemeanors and administrative penalties
2.3. Material investigations
4. GOOD GOVERNANCE
5. MONITORING COMPLIANCE
5.1. Units and internal procedures
5.2. Assessment and communication procedure
5.3. Penalty rules
6. REGISTER OF SENIOR OFFICIALS AT PARENT INSTITUTIONS