Legislation

ROYAL DECREE-LAW 18/1982, OF 24th OF SEPTEMBER), BANKING INSTITUTIONS, SAVINGS BANKS AND CREDIT COOPERATIVES BANKS DEPOSIT GUARANTEE FUND REGIME. (BOE OF 1ST OCTOBER).

(Comprise modifications by Royal Decree-Law 12/1995, of 28th december, and by Law 37/1998, of 16th november).

Article 1.

1. The Savings Bank Deposit Guarantee Fund, created by Royal Decree 2860/1980, of 4th December, shall have public legal personality, with full capacity for the carrying out of its functions under private law and shall not be subject to the rules governing autonomous government bodies, autonomous state-owned companies and state-owned companies.

2. Its purpose shall be to guarantee the deposits held by Savings Banks in the manner and to the extent set by the government, and to carry out any actions it considers necessary to bolster solvency and improve the operation of Savings Banks in defence of the interests of the Fund.

3. The Fund shall be governed and administered by a Management Committee, which shall consists of four representatives of the Banco de España, one of whom shall be the chairman, and four representatives of the Savings Banks, appointed by the Ministry of Economy and Commerce at the proposal of the Banco de España.

Article 2.

1. The Deposit Guarantee Fund for Credit Cooperative Banks is formed with full legal personality and capacity to carry out its functions. Its business shall be governed by private law and it shall not be subject to the rules governing autonomous state institutions and state-owned companies.

2. It shall aim to guarantee the deposits in Rural Savings Banks and other Credit Cooperative Banks recorded in the Special Register, created in article 3.1. of Royal Decree 2860/1978, 3rd November in the manner and to the extent set by the Government, and to carry out any such actions as necessary to bolster solvency and improve the functioning of the Cooperatives in defence of the interests of the Fund.

3. The Fund shall be governed and administered by a Management Committee, which shall comprise four representatives of the Banco de España, one of whom shall be chairman, and four representatives of the Credit Cooperative Banks appointed by the Ministry of Economy and Commerce, at the proposal of the Banco de España.

Article 2 bis.

1. All Spanish credit institutions shall be obliged, according to their legal nature, to be a member of the Deposit Guarantee Funds, regulated by statute or by Royal Decree-Law 4/1980, 28th March However, it may be foreseen that, or required that, a credit institution join a Fund other than that to which it would correspond by virtue of its legal nature, whether as a result of its specific characteristics or its economic dependence, under the conditions established in the regulations.

The duty established in the foregoing paragraph shall not be applicable to the Official Credit Institute. In the same way, during the transitional period stipulated in the first additional provision of Law 3/1994, of 14th April, this duty shall not be applicable to mortgage credit companies, financing institutions and financial leasing companies.

2. The branch offices of foreign credit institutions operating in Spain shall be included in the Spanish Deposit Guarantee Fund under the circumstances and in the manner laid down by statute.

3. Each of the Guarantee Funds shall be governed and administered by a Management Committee comprising eight members appointed by the Minister of the Treasury, four representing the Banco de España, one of which shall act as chairman, and four representing the member financial institutions, who shall be appointed under the terms laid down by statute, upon the proposal of the member institutions.

Article 2 ter.

1. Guarantee Funds for Deposits held by Banks Institutions, Savings Banks, and Credit Cooperative Banks, shall indemnify investors who have entrusted financial resources, securities or other financial instruments to any member institution for their deposit and administration or for the performance of any investment service from among those considered in Law 24/1988, 28th July, on the Stock Market, in the cases described in Article 5, number 1 and 1bis, of this Royal Decree-Law. This cover shall have the form, term and scope defined by the relevant regulations.

Article 3.

1. The Deposit Guarantee Funds for Banking Institutions, Savings Banks and Credit Cooperative Banks shall be provided with funds, in the manner stipulated by their regulations, by means of annual contributions from the member credit institutions of each, whose contribution shall be 2 per thousand of the deposits guaranteed by the relevant Fund.

When a Fund’s net equity becomes negative, the Management Committee may resolve, by a two thirds majority of all its members, to demand additional contributions from member institutions. These contributions shall be apportioned according to the basis on which they were calculated, and their total value may not exceed the sum necessary to eliminate the deficit existing.

2. However, when the assets held by a Fund reach sufficient levels for it to carry out its functions, the Minister of the Treasury, at the proposal of the Banco de España, may agree on a decrease to the above mentioned contribution. In any case, contributions shall be suspended when the asset fund not committed to any transactions in relation to the object of the Fund equals or exceeds 1 per cent of the deposits of its member institutions.

3. Exceptionally, in order to safeguard the stability of its group of member institutions, a Fund may also draw upon contributions from the Banco de España, whose amount shall be set by Law.

Article 4.

The fiscal regime governing the Deposit Guarantee Funds for in Savings Banks and Credit Cooperative Banks shall be as follows:

a) Corporation Tax shall be applied in accordance with the rules of article 5.1. of Law 61/1978, of 27th December, envisaged for the Banco de España.

b) The Funds shall be exempt from any indirect taxes that may accrue to them as a consequence of their being formed, their operation and the actions or transactions that they carry out in the fulfilment of their purpose. This exemption shall also extend to transactions subject to indirect taxes applicable to the Funds by virtue of the provisions that regulate them.

Article 5.

1. The Funds shall indemnify depositors with the full value of the deposits guaranteed when one of the following circumstances obtains:

a) The institution has been declared bankrupt.

b) There has been a court order requiring the institution be placed under temporary receivership.

c) The Banco de España decides, that as a result of non-repayment of deposits the institution is unable to repay in the immediate future as a direct result of its current financial situation. Banco de España will take the above mentioned decision as soon as possible and, in any case, will have to resolve in the maximun term that decides in due form, after having verified that the institution has not managed to return the deposits which have matured and may be demanded of it.

1 bis. Independently of the sum established as guarantee for deposits under article 1, number 2, of Royal Decree-Law 4/1980, 28th March, and article 1, section 2 and article 2, section 2, of this Royal Decree-Law, Deposit Guarantee Funds shall indemnify holders of securities or other financial instruments entrusted to credit institutions with the guaranteed amounts when any of the following events occurs:

a) The credit institution is declared bankrupt, or its declaration of temporary receivership has been applied for through the courts and these situations do not imply the suspension or restoration of the securities or financial instruments; nevertheless, no sums shall be payable if, within the period envisaged by the regulations for commencing payment the above-mentioned temporary receivership is lifted.

b) That, following the no restoration of the securities or financial instruments, the Banco de España decides that the credit institution is unable to restore them in the immediate future for reasons directly related to its financial situation. The Banco de España shall have available to a period of twenty-one days within which to verify that this condition obtains and resolve upon the applicability of the indemnity.

1 ter. All payments made by the Deposit Guarantee Fund by virtue of the two preceding points shall be realized in cash. For the purposes of this payment the securities or other financial instruments shall be valued in the form determined by the regulations.

By the mere fact of making payment the Deposit Guarantee Fund shall legally surrogate the rights of the creditor or investor corresponding to the amount paid. The documentary proof of the payment’s having been made shall be sufficient title.

In the even of the securities or other instruments entrusted to the institution being restored subsequent to the payment of the guaranteed sum pursuant to number 1 bis, the Deposit Guarantee Funds may seek to compensate itself for this sum settled, in whole or in part, if the value restored was greater than the difference between that entrusted to the institution and the sum paid to the investor. It shall be empower for these purposes to recover from the investor the resulting sum in accordance with the procedures and criteria for assignation and valuation established by the relevant regulations.

2. Finance companies which do not make their contributions in the appropriate manner to the Deposit Insurance Fund of which they are a member, or that, in general, are in breach of the duties that correspond them with respect to it, may be expelled from the Fund once the measures adopted to ensure their compliance have failed. The Minister of the Treasury, on the proposal of the Banco de España following a report from the Management Committee of the Fund in question, shall have competence to decide such exclusion.

Article 6.

1. When a Bank Institutions, Savings Bank or Credit Cooperative Banks goes into temporary receivership, pursuant to the Law of the 26th of July 1992, the two official receiver (who shall be qualified mercantile experts chosen from those appearing on the Court lists, pursuant to the fourth article of the above mentioned Law of Temporary Receivership), shall be named on the lists that are sent to the Deposit Guarantee Fund to which the Institution belongs or belonged.

When the circumstances of the first paragraph of the sixth article of the above-mentioned Law obtain and suspension and substitution of the administrative bodies of the suspended institution takes place, the Administrator shall be the Deposit Guarantee Fund itself.

2. When a Bank Institutions, Savings Banks or Credit Cooperative Banks is formally declared to be bankrupt in accordance with the standards of the Commercial Code and the Law Of Civil Judgement, the functions of its bodies, i.e. the Commissioner, Depository and Syndics, shall be assumed by the Deposit Insurance Fund to which the institution belongs or has belonged, and it shall substitute them for all purposes.

Article 7.

The Government shall stipulate the precise measures for the development and application of this Royal Decree-Law, which shall come into effect on the day following its publication in the “Official State Gazette”, and it shall give an immediate report of the same to Parliament.