Spanish financial system: New solvency requirements and opportunities for investors

Londres, 17 de marzo de 2011


On February 19, 2011, the Spanish Official Gazette published the new regulations on the reform of the Spanish Banking System enacted by virtue of the Royal Decree-Law 2/2011 of February 18, 2011, for the reinforcement of the Financial System (the “RDL”). Although these new regulations are not limited to the Spanish savings banks (cajas de ahorro), the market considers them the main target for the new solvency requirements, in a sector that is already under a severe reorganization.

The key issues addressed by the RDL are (i) the implementation of the Basel III criteria and the consideration of the core capital (capital principal) for solvency purposes; (ii) the timeframe for its implementation; (iii) the new role of the FROB as an aid scheme, and, (iv) the effects on the entities that do not comply with the new requirements.

These new solvency requirements may open a window to foreign investors and other institutions to participate in the reorganization of the Spanish financial system, not only by buying a direct interest in the financial institutions to be formed, but also by finding investment opportunities in the portfolio companies held by the institutions, not only in real estate, but in a substantial part of the industrial base and widely spread throughout Spain as a mechanism to be used by savings banks and other financial institutions to comply with the requirements of core capital imposed by the new RDL.

In this seminar, we will address the main aspects of the new regulations and provide foreign investors with a practical approach on how to help reorganize the Spanish financial system.