The main operators in the Spanish financial system can be classified in Table 1.
|FINANCIAL SYSTEM OPERATORS|
|Central bank||Bank of Spain|
|Credit institutions||Spanish and foreign banks|
|Official Credit Institute (Instituto de Crédito Oficial, ICO)|
|Savings Banks. Spanish Confederation of Savings Banks (Confederación Española de Cajas de Ahorro, CECA)|
|Financial auxiliaries||Credit Financial Establishments|
|Electronic Money Institutions|
|Mutual Guarantee and Counter-guarantee Societies|
|Collective investment Schemes||Fondos de Inversión
|Management Companies of Collective Investment Schemes|
|Portfolio Management Companies|
|Financial Advisory Firms|
|Closed-ended type Collective Investment Entities||Venture Capital Entities, including SME Venture Capital Entities|
|Closed-ended type collective investment entities|
|European venture capital funds|
|European social entrepreneurship funds|
|Management companies of Closed-ended type Collective Investment Entities|
|Insurance and reinsurance companies and insurance intermediaries||Insurance and Reinsurance Companies|
|Pension Plans and Funds||Pension Plans|
|Management Companies of Pension Funds|
|Securitization vehicles||Securitization Funds1|
|Securitization Fund Management Companies|
The key features of the financial system operators are described below.
2.1 Central Bank
The Spanish Central bank is the Bank of Spain. It is the national central bank, entrusted with supervising the Spanish banking system, and its activities are regulated by the Law on the Autonomy of the Bank of Spain.
Following the creation of the European System of Central Banks (ESCB) and the European Central Bank (ECB), the Bank of Spain’s functions have been redefined in Table 2.
|FUNCTIONS OF THE BANK OF SPAIN|
|Participation in the functions of the European System of Central Banks (ESCB)||Defining and implementing monetary policy in the euro zone with the aim of maintaining price stability in the euro zone.|
|Conducting foreign currency exchange transactions and holding and managing the Spanish State’s official foreign exchange reserves.|
|Promoting the sound working of the euro zone payment system.|
|Issuing legal tender banknotes.|
|Functions established in the Law on the Autonomy of the Bank of Spain||Supervising the solvency and behavior of credit institutions and the financial markets.|
|Promoting the sound working and stability of the financial system and of Spain’s payment systems.|
|Preparing and publishing statistics on its functions.|
|Providing treasury services and acting as a financial agent for government debt.|
|Advising the Government and preparing the appropriate reports and studies.|
|Holding and managing currency and precious metal reserves not transferred to the ECB.|
|Placing coins in circulation and performing, on behalf of the State, all other functions entrusted to it in this connection.|
The inclusion of the Bank of Spain in the Single Supervisory Mechanism
Council Regulation (EU) 1024/2013 of October 15, 2013, has created a Single Supervisory Mechanism (SSM), which introduces a new financial supervision system made up of the European Central Bank (ECB) and the Competent National Authorities (CNA) of the participating EU member states, which include the Bank of Spain. The ECB’s Regulation (EU) No 468/2014 of 16 April 2014 establishes the framework for cooperation within the SSM between the ECB and CNA and with national designated authorities.
Its main objectives are to ensure the safety and soundness of the European banking system and to enhance financial integration and stability in Europe. In addition, the SSM plays a crucial role in ensuring a coherent and effective implementation of the Union’s policy relating to the prudential supervision of credit institutions.
Under additional provision sixteen of Law 10/2014, of June 26, 2014, on regulation, supervision and solvency of credit institutions, the Bank of Spain was included in the SSM in its capacity as a competent national authority, whereby the Bank of Spain will exercise its regulatory and supervisory powers, notwithstanding the functions entrusted to the ECB in the context of the SSM and in conjunction with this institution.
2.2 Credit institutions
The main credit institutions, i.e. banks, savings banks and credit cooperatives, play a particularly important role in the financial industry in Spain, because of the volume of their business and their presence in all segments of the economy. Credit institutions are authorized to engage in what is referred to as “universal banking”, i.e. not to confine themselves to traditional banking activities consisting merely of attracting funds and financing by granting loans and credit facilities, but also to provide para-banking, securities market, private banking and investment banking services.
However, with the aim of removing imbalances in the Spanish financial industry to permit its restructuring, significant changes have been made in the industry, mainly affecting groups of national banks and savings banks. Accordingly, the restructuring process is being carried out through concentrations of savings banks, banks and credit cooperatives, the conversion of savings banks into banks and recapitalization processes at certain institutions. The trend in the Spanish credit institutions sector is therefore towards a reduction in the number of institutions registered with the Bank of Spain.
As of December 31, 2017, there are officially registered at the Bank of Spain the Official Credit Institute 59 banks, 2 savings banks, 63 credit cooperatives, 39 representative offices in Spain of foreign credit institutions, 78 branches of non-Spanish EU credit institutions, 4 branches of non-EU credit institutions, 582 non-Spanish EU credit institutions operating in Spain without an establishment, 8 financial institutions which are subsidiaries of a non-Spanish EU credit institution, operating in Spain without an establishment, and 4 non-EU credit institutions operating in Spain without an establishment2.
Banks are corporations (sociedades anónimas) legally authorized to perform the functions reserved to credit institutions.
Their key features are summarized in Table 3.
|CHARACTERISTICS OF BANKS|
Formation of banks
2.2.2. Official Credit Institute (ICO)
It is a State-owned credit institution, attached to the Ministry of Economy and Business through the Office of the Secretary of Economy and Business Support.
It acts as the State’s finance agency, providing financing pursuant to express instructions from the Government to those affected by serious economic crises or natural disasters. It also manages official export and development financing instruments.
2.2.3. Savings banks
Savings banks are credit institutions with the same freedoms as and full operational equality with the other members of the Spanish financial system. They have the legal form of private foundations and a community-welfare purpose and operate in the open market, although they reinvest a considerable portion of their earnings in community outreach projects3.
These long-standing institutions with deep roots in Spain have traditionally attracted a substantial portion of private savings, with their lending business characteristically focused on the private sector (through mortgage loans, etc.). They have also been very active in financing major public works and private-sector projects by subscribing and purchasing fixed-income securities.
Currently, as a result of the savings bank restructuring process, a number of savings banks have emerged which, while retaining their status as credit institutions, have stopped engaging directly in their traditional financial activity, as their financial business has been transferred to banks formed for that purpose and owned by the savings banks via the creation of Institutional Protection Schemes (IPSs).
Of a total of 45 Savings Banks (at the beginning of 2010), 43—which in terms of volume of total average assets represent 99.9% of the sector—have taken part or are currently taking part in some kind of consolidation process. As a result, the sector has gone from having a total of 45 entities with an average size of €29,440 million (December 2009) to being made up of 11 entities or groups of entities, with an average volume of assets of €89,550 million (March 2015). Currently there are two savings banks that are Caixa Ontinyent and Caixa Pollença4.
The Spanish savings banks are members of the Spanish Confederation of Savings Banks (CECA), a credit institution formed in 1928 to act as the national association and financial institution of the Spanish savings banks. The “special foundations”, the central institutions of the IPSs, the instrumental banks through which the savings banks engage in their financial activity and the institutions whose financial business derives from a savings bank all form part of the CECA. The CECA aims to strengthen the position of the savings banks, it acts as a forum for strategic reflection for all savings banks and other member entities, it advises them and it provides them with competitive products and services.
2.2.4. Credit cooperatives
Credit cooperatives are credit institutions that combine the corporate form of a cooperative and the activity and status of a fully operational credit institution.
Their uniqueness and importance lies in the fact that they function as a nonprofit organization, since their members combine their funds to make loans to each other, with any excess revenues being returned to the members in the form of dividends.
Their key features are described in Table 4.
|CHARACTERISTICS OF CREDIT COOPERATIVES|
They may perform all types of lending and deposit-taking operations and provide all the services permitted to banks and savings banks, provided they give priority to the financial needs of their members.
Each member must have a holding of at least €60.01 in the capital. No legal entity may hold more than 20% of the capital, unless it is a cooperative, in which case the holding cannot exceed 50% of the capital. No individual may hold more than 2.5% of the capital of a credit cooperative.
Formation of credit cooperatives
Additional considerations regarding credit institutions:
The regime governing significant holdings and changes of control at credit institutions.
Any individual or legal entity that, acting alone or in concert with others, intends to acquire, directly or indirectly, a significant holding5 in a Spanish credit institution or to increase, directly or indirectly, the holding in that institution so that either the percentage of voting rights or capital held is equal to or greater than 20, 30 or 50 percent, or that, by virtue of the acquisition could control the credit institution, must give prior notice to the Bank of Spain in order to secure a statement of non-opposition to the proposed acquisition, indicating the amount of the expected holding and including all the information required by law. Likewise, any individual or legal entity that has taken a decision to dispose, directly or indirectly, of a significant holding in a credit institution, must first notify the Bank of Spain of such circumstance.
It is the task of the Bank of Spain to assess proposed acquisitions of significant holdings and submit a decision proposal to the European Central Bank so that it can decide whether or not to oppose the acquisition.
Furthermore, any individuals or legal entities that, acting alone or in concert with others, have acquired, directly or indirectly, a holding in a credit institution, so that the percentage of voting rights or of capital that they hold is equal to or greater than 5%, must give immediate written notice of such circumstance to the Bank of Spain and the credit institution in question.
Similarly, any individual or legal entity that decides to cease to hold, directly or indirectly, a significant holding in a credit institution, must notify the Bank of Spain of such decision beforehand, indicating the shareholding percentage it intends to hold. It must also notify the Bank of Spain if it intends to reduce its significant shareholding in such a way that the percentage of voting rights or capital held by it falls to below 20, 30 or 50 percent, or results in the loss of control over the credit institution.
- Cross-border activities of credit institutions.With regard to the cross-border activities of credit institutions, the following may be noted:
- A Spanish credit institution may operate abroad by opening a branch or under the freedom to provide services.
- Credit institutions authorized in another EU Member State may engage in Spain, either by opening a branch or under the freedom to provide services, in activities that benefit from mutual recognition within the European Community.
- Likewise, credit institutions not authorized in an EU Member State may provide services through a branch or under the freedom to provide services, but they will require prior authorization.
In all cases, the credit institutions must fulfill a number of statutory requirements.
Furthermore, credit institutions may operate in Spain through representative offices. However, representative offices may not perform credit operations, collect deposits, or engage in financial intermediation, nor may they provide any other kind of banking services. They are confined to engaging in merely information-related or commercial activities regarding banking, financial or economic matters. However, they may promote the channeling of third-party funds, through credit institutions operating in Spain, to their credit institutions in their countries of origin, and serve as a medium to provide services without a permanent establishment (that is, under the freedom to provide services).
- Cross-border activities of credit institutions.With regard to the cross-border activities of credit institutions, the following may be noted:
2.3 Financial auxiliaries
2.3.1 Credit financial establishments
Credit financial establishments (establecimientos financieros de crédito) are institutions specialized in certain activities (e.g. financial leasing, financing, mortgage loans, etc.) which cannot raise deposits from the general public.
Their key features are summarized in Table 5.
|Their scope of operations is the pursuit of banking and para-banking activities:
They may perform any accessory activities necessary for the better pursuit of their principal activity.
Credit financial establishments may carry out, in addition to the aforementioned activities, the provision of payment services and the issuing of electronic money6, by obtaining one specific authorization. This being the case, credit financial establishments shall be deemed as hybrid payment institutions or hybrid electronic money institutions and would be subject to the provisions applicable to such institutions.
They are prohibited from raising funds from the general public and are therefore not required to form part of a Deposits Guarantee Fund. They can nevertheless take repayable funds through the issue of securities, in accordance with the provisions of Legislative Royal Decree 4/2015, of October 23 2015, approving the revised Securities Market Law (LMV) and its enabling regulations, subject to the requirements and limitations imposed specifically in respect of EFCs. EFCs are able to securitize their assets, in accordance with the provisions of the legislation on securitization funds.
Formation of credit financial establishments
Royal Decree-Law 14/2013, of November 29, 2013, on urgent measures to adapt Spanish law to the EU legislation on supervision and solvency of financial institutions (hereinafter, “Royal Decree-Law 14/2013”) modified the legal regime for Credit Financial Establishments which, from January 1, 2014, and until a new regime is approved for them (envisaged in the Bill on Promoting Business Finance), lose their status as credit institutions.
This regime has been approved by Law 5/2015 of April 27, 2015 on the promotion of business financing, according to which credit financial establishments cannot be classed as credit institutions. This law nevertheless envisages the supplementary application of the legislation on credit institutions in all areas not specifically addressed by the legislation on credit financial establishments. In particular, the rules established for credit institutions which are applicable to credit financial establishments include the following: those on significant holdings, suitability and incompatibility of persons in senior management positions, corporate governance, solvency, transparency, the mortgage market, the regime on insolvency and prevention of money laundering and financing of terrorism.
As of December 31, 2017, 31 Credit Financial Institutions had registered on the Bank of Spain’s Administrative Register.
Introduced by Payment Services Law 16/2009, payment institutions7 are those legal entities, other than credit institutions and electronic money institutions, which have been granted authorization to lend and execute payment services, that is, services that permit effective deposits in a payment account, and those enabling cash withdrawals, the execution of payment transactions, and the issuance and acquisition of payment instruments and money remittances. Payment institutions are not authorized to collect deposits from the general public or to issue electronic money. In this regard, it should be noted Ministerial Order EHA 1608/2010, of June 14, 2010, on transparency of conditions and reporting requirements applicable to payment services, and Royal Decree 712/2010, of May 28, 2010, on the legal regime for payment services and payment institutions, which supplement the above-mentioned Law 16/2009.
As of December 31, 2017, there are officially registered at the Bank of Spain 39 payment institutions, 14 branches of non-Spanish EU payment institutions, 400 non-Spanish EU payment institutions operating in Spain without an establishment and 3 networks of agents of EU payment institutions.
Electronic money institutions (introduced by Law 44/2002 on Measures for the Reform of the Financial System or Financial Law) are credit institutions specialized in issuing electronic money, that is, monetary value represented by a claim on its issuer: a) stored on an electronic device; b) issued on receipt of funds of an amount not less in value than the monetary value issued; and c) accepted as a means of payment by undertakings other than the issuer. As a consequence of the development of the sector, which made it advisable to amend the regulatory framework of the electronic money institutions and of the issuance of electronic money, the Electronic Money Law 21/2011, of July 26, 2011 has been approved and implemented by Royal Decree 778/2012, of May 4, 2012, on the legal regime for electronic money institutions. The aim of this law is threefold: (I) to make regulation of the issuance of electronic money more specific, clarifying the definition of electronic money and the scope of application of the law; (II) to remove certain requirements that are deemed inappropriate for electronic money institutions; and (III) to guarantee consistency between the new legal regime for payment institutions, described above, and electronic money institutions. In this regard, electronic money institutions are also authorized to provide all the payment services typical of payment institutions. As in the case of payment institutions, these entities cannot take deposits or other repayable funds from the public.
As of December 31, 2017, there are 5 electronic money institutions officially registered at the Bank of Spain, 2 branches of non-Spanish EU electronic money institutions, 156 non-Spanish EU electronic money institutions operating in Spain without an establishment and 1 network of agents of EU electronic money institutions.
2.3.4 Mutual Guarantee and Counter-Guarantee Societies
Mutual guarantee societies were first introduced in 1978 and since then have operated in the area of medium- and long-term financing of small and medium-sized enterprises, to which they provide guarantees, mainly, through endorsements. The legal regime by which they are regulated is established in Law 1/1994 of March 11, 1994 on the Legal Regime governing Mutual Guarantee Societies and the corresponding enabling regulations.
As of December 31, 2017, there were a total 19 mutual guarantee societies registered at the Bank of Spain.
Their corporate purpose is as follows:
- To provide their members with access to credit and to credit-related services.
- To improve the financial conditions of their members.
- To provide personal guarantees in any lawful form, other than in the form of an insurance surety.
- To provide financial advice and assistance to their members.
- To take holdings in companies and associations whose sole purpose is to engage in activities for small and medium-sized companies. To this end, they must have the required reserves and obligatory provisions.
Members of mutual guarantee societies can be of two types: (I) participating members and (II) protector members.
Counter-guarantee societies, which are classed as financial institutions for the purposes of Law 1/1994, with the legal form of corporations, and which necessarily have an ownership interest held by the State, coexist with these mutual guarantee societies. Their purpose is to provide sufficient coverage and assurance for the risks assumed by the mutual guarantee societies, also furnishing the cost of the guarantee for the members. The legal regime applicable to them is supplemented by Royal Decree 2345/1996 of November 8, 1996 setting out the rules on the administrative authorization of and solvency requirements applicable to counter-guarantee societies, and Royal Decree 1644/1997 of October 31, 1997 setting out the rules on the administrative authorization of and solvency requirements applicable to counter-guarantee societies.
2.3.5 Valuation companies
These companies are authorized to perform appraisals of real estate for certain types of financial institutions, in particular those related to the mortgage market.
Officially approved valuation companies are registered and supervised by the Bank of Spain. Their administrative rules, which aim to enhance the quality and transparency of appraisals, are established in Royal Decree 775/1997 of May 30, 1997 and Law 2/1981 regulating the mortgage market.
As of December 31, 2017, there are 35 valuation companies officially registered at the Bank of Spain.
2.4 Collective investment schemes
Collective investment schemes (instituciones de inversión colectiva, or IICs) are vehicles designed to raise funds, assets or rights from the general public to manage them and invest them in assets, rights, securities or other instruments, financial or otherwise, provided that the investor’s return is established according to the collective results.
The favorable tax treatment enjoyed by collective investment schemes in Spain has led to a considerable increase both in the number of these vehicles and the volume of their investments.
According to data published by INVERCO, (the Spanish Association of Collective Investment Schemes and Pension Funds), financial saving (financial assets) by Spanish households at the end of September 2017 amounted to, according to the Bank of Spain, 2.11 billion euros. In the first three quarters of the year, Spanish households increased by 39,178 million euros its balance of financial assets, representing an increase of 1.9% with respect to December 2016. Funds and investment companies experienced positive net subscriptions of high magnitude, being the collective investment schemes leaders in the increase of the balance of financial assets in 2017 (9.9%).
This has enabled the IICs to continue increasing its weighting in total savings of Spanish families up to 14.5% of the total. Thus, the net financial wealth of households has increased 2.8% until September, and stood at 1.33 billion euros8.
In addition to the abundant sectorial legislation, the basic rules for IICs are contained in Collective Investment Scheme Law 35/2003, of November 4, and its implementing regulation, approved by Royal Decree 1082/2012, of July 13, 2012. This legislation transposes the latest version of Directive 2009/65/EC9 of the European Parliament and of the Council of July 13, 2009 on the coordination of laws, regulations and administrative provisions relating to Undertakings for Collective Investment in Transferable Securities (UCITS).
Spanish collective investment schemes may be of two types:
- Financial: Their primary activity is to invest in or manage transferable securities. These include investment companies and securities funds, money market funds and other institutions whose corporate purpose is to invest in or manage financial assets.
- Non-financial: They deal mainly in real asset assets for operation purposes and include real estate investment companies and funds. Of note in this regard is the creation of Listed Corporations for Investment in the Real Estate Market (Sociedades Anónimas Cotizadas de Inversión en el Mercado Inmobiliario, SOCIMIs) whose main activity is to acquire and develop urban real estate for lease activities.
As for the legal form that the various schemes may take, the legislation envisages two alternatives:
- Investment Companies: These are collective investment schemes that take the form of a corporation (and therefore have legal personality) and whose corporate purpose is to raise funds, assets or rights from the general public to manage them and invest them in assets, rights, securities or other instruments, financial or otherwise, provided that the investor’s return is established according to the collective results. The management of an Investment Company is entrusted to its board of directors, although the general meeting—or the board of directors by delegation—has the authority to resolve upon the appointment of an SGIIC as the party responsible for guaranteeing compliance with the provisions of Royal Decree 1082/2012 of July 13, 2012 approving the enabling Regulations for Law 35/2003 of November 4, 2003 on collective investment institutions (the IIC Regulation). If the Investment Company does not appoint a SGIIC, the company itself shall be subject to the regime for SGIICs established in Royal Decree 1082/2012. The SGIIC appointed, or the Investment Company if a SGIIC has not been appointed, may in turn delegate the management of investments to another financial institution or institutions in the manner and subject to the requirements set out in the IIC Regulation. The number of shareholders may not be less than 100. In the case of multiple compartment SICAVs, the number of shareholders may not be less than 20, and the total number of shareholders of the SICAV may not be less than 100 under any circumstances.
Financial Investment Companies will be formed as open-ended investment companies (sociedades de inversión de capital variable, or SICAV) with variable capital, that is, capital that may be increased or reduced within the maximum or minimum capital limits set in their bylaws, by means of the sale or acquisition by the company of its own shares. Shares will be issued and bought back by the company at the request of any interested party according to the corresponding net asset value on the date of the request. The acquisition of own shares by the SICAV, in an amount between the initial capital and the limit per the bylaws, will not be subject to the restrictions established for the derivative acquisition of own shares in the Capital Companies Law. Since they are listed companies, SICAV shares must be represented by book entries (the unofficial market habitually used for trading the shares of SICAVs is the Alternative Stock Market (Mercado Alternativo Bursátil, MAB)). Non-financial Investment Companies will be closed-end companies, i.e. they will have a fixed capital structure.
It is obligatory for SICAVs to have a depositary.
- Investment Funds: These are pools of assets with no legal personality divided into a number of transferable units (with no par value) with identical properties belonging to a group of investors (“unit-holders”) who may not be fewer than 100. In the case of multiple compartment investment funds, the number of unit-holders in each of the compartments may not be less than 20 and the total number of unit-holders of the investment fund may not be less than 100 under any circumstances. The subscription or redemption of the units depends on their supply or demand, so their value (“net asset value”) is calculated by dividing the value of the assets of the fund by the number of units outstanding. Payment on redemption will be made by the depositary within a maximum of three business days from the date of the net asset value applicable to the company.
A fund is managed by Management Company of Collective Investment Schemes that has the power to dispose of the assets, although it is not the owner of the assets. A Depositary is the company responsible for the liquidity of the securities and, as the case may be, for their safe-keeping. Both companies are remunerated for their services through fees.
Listed investment funds are those whose units are admitted to trading on a stock exchange, for which purpose they must meet a number of requirements.
A distinction may also be drawn between collective investment schemes according to whether they are subject to Spanish or European legislation:
- Spanish Collective Investment Scheme (IIC) legislation:
Spanish IICs are investment companies with registered office in Spain and investment funds formed in Spain. They are subject to Spanish IIC legislation, which reserves the corresponding activity and name for them.
Foreign IICs are any IICs other than those mentioned in the preceding paragraph. If they wish to be traded in Spain, they must meet certain requirements established in the applicable legislation.
- European Collective Investment Scheme (IIC) legislation:
Harmonized IICs are IICs authorized in an EU Member State in accordance with the UCITS legislation.
Non-harmonized IICs are IICs domiciled in an EU Member State that do not meet the requirements established in the UCITS legislation and IICs domiciled in non-EU Member States. In addition, Collective Investment Schemes of Free Investment, commonly known in the market as Hedge Funds10, are in any case considered as non-harmonized IICs. Collective Investment Schemes of Free Investment may invest in financial assets and instruments and in derivatives, regardless of the nature of the underlying assets. Such investments must respect the general principles of liquidity, risk diversification and transparency, but are not subject to the rest of the investment rules established for IICs.
The Spanish National Securities Market Commission (CNMV) is the body in charge of supervising IICs. In this respect, both investment companies and investment funds require prior authorization from the CNMV for their formation. After their formation and registration at the Commercial Registry (the registration requirement is not obligatory for investment funds), the CNMV registers the IIC and its prospectus on its register.
The asset and capital requirements of the main types of IICs include the following:
- Financial investment funds will have minimum assets of €3,000,000. In the case of multiple compartment funds, each compartment must have at least €600,000 in assets and the total minimum capital paid in may not be less than 3,000,000 under any circumstances.
- The minimum capital of Open-End Investment Companies (SICAVs) will be €2,400,000, which must be fully subscribed and paid in. In the case of multiple compartment SICAVs, each compartment must have minimum capital of €480,000 and the total minimum capital paid in may not be less than 2,400,000 under any circumstances.
- The minimum capital stock of real estate investment companies will be €9,000,000. In the case of multiple compartment companies, each compartment must have capital of at least €2,400,000 and the total capital of the company may not be less than 9,000,000 under any circumstances.
A brief comment should also be made regarding the trading11 of foreign IICs in Spain which, subject to fulfillment of the formalities and requirements established in the legislation, requires that a distinction be drawn between:
- Harmonized IICs, which may trade in Spain unrestricted once the competent authority in the home Member State informs them that it has sent the CNMV a notification with the relevant information.
- Non-harmonized IICs and IICs authorized in a non-EU Member State, which require express authorization from the CNMV and registration on its registers.
2.4.2. Management Companies of Collective Investment Schemes
The key features of Management Companies of Collective Investment Vehicles (SGIICs) are as follows:
- They are corporations which have as their corporate purpose the management of investments, the control and management of risks, administration, representation and the management of subscriptions and redemptions of investment funds and companies. They may also market the participation units or shares of IICs.
- Moreover, SGIICs may be authorized to engage in the following activities:
- Discretionary and individualized investment portfolio management.
- Administration, representation, management and marketing of venture capital entities, closed-ended collective investment entities, European venture capital funds (EVCF) and European social entrepreneurship funds (ESEF).
- Investment advice.
- Safe-keeping and management of units of investment funds and, as the case may be, of shares of investment companies, EVCFs and ESEFs.
- Receipt and transfer of customer orders relating to one or more financial instruments.
- It falls on the CNMV to grant prior authorization for the formation of an SGIIC. Once formed, in order to commence its operations, the SGIIC must be registered at the Commercial Registry and on the appropriate CNMV register.
- SGIICs must, at all times, have equity12 that may not be less than the larger of the following amounts:
- Minimum capital stock of €125,000 fully paid in and increased by certain proportions established in the IIC regulations according to certain circumstances.
- 25% of the overheads charged in the income statement for the prior year. Overheads will comprise personnel expenses, general expenses, levies and taxes, amortization/depreciation charges and other operating charges.
- The current legislation introduces the necessary provisions to ensure the correct functioning of the cross-border fund management company passport, enabling Spanish SGIICs to manage funds domiciled in other EU Member States and SGIICs from other Member States to manage Spanish funds.
- In addition, regarding cross-border activities of SGIICs, the following may be noted:
- SGIICs authorized in Spain may engage in the activity to which the foreign authorization refers, either through a branch or under the freedom to provide services, after fulfilling all formalities and requirements established by law.
- Foreign SGIICs may engage in their activities in Spain either by opening a branch or under the freedom to provide services, provided that they satisfy the relevant statutory formalities and requirements.
- Any individual or legal entity that, alone or acting in concert with others, intends to, directly or indirectly, acquire a significant holding13 in a Spanish SGIIC or to, directly or indirectly, increase their holding in that SGIIC so that either the percentage of voting rights or of capital they hold is equal to or greater than 20, 30 or 50 percent, or by virtue of the acquisition they could come to control the SGIIC, they must first notify the CNMV in order to secure a statement of non-opposition to the proposed acquisition, indicating the amount of the expected holding and including all the information required by law. Acquiring or increasing significant holdings in breach of the law constitutes a very serious infringement. In addition, any individual or legal entity that, directly or indirectly, intends to dispose of a significant holding in an SGIIC, to reduce their holding so that it falls below the thresholds of 20, 30 or 50 percent, or that, as a result of the proposed disposal, may lose control of the credit institution, must give prior notice to the CNMV.
Likewise, any individual or legal entity that, alone or acting in concert with others, has acquired, directly or indirectly, a holding in a management company, so that the percentage of voting rights or of capital that they hold is equal to or greater than 5%, must give immediate written notice to the CNMV and the SGIIC in question, indicating the amount of the resulting holding.
2.5 Investment Firms
Investment Firms are companies whose main activity is to provide professional investment services to third parties on financial instruments subject to securities market legislation.
Under Spanish law, investment firms provide the following investment and ancillary services.
Investment and ancillary services in Table 6.
|INVESTMENT AND ANCILLARY SERVICES|
|Basic regulation||a. Reception and transmission of client orders relating to one or more financial instruments.|
|b. Execution of those orders on behalf of clients.|
|c. Dealing on own account.|
|d. Discretionary and individualized investment portfolio management in accordance with client mandates.|
|e. Placement of financial instruments, whether on or not on a firm commitment basis.|
|f. Underwriting of an issue or a placement of financial instruments.|
|g. Provision of investment advice.|
|h. Management of multilateral trading systems.|
|Corporate purpose||a. Safekeeping and administration of financial instruments for the account of clients.|
|b. Granting credits or loans to investors to allow them to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction.|
|c. Advising companies on capital structure, industrial strategy and related matters, and providing advice and services relating to mergers and acquisitions.|
|d. Services related to operations for the underwriting of issues or placing of financial instruments.|
|e. Preparation of investment and financial analysis reports or other forms of general recommendations relating to transactions in financial instruments.|
|f. Foreign exchange services where these are related to the provision of investment services.|
|g. Investment services and ancillary services related to the non-financial underlying of certain financial derivatives when these are related to the provision of investment services or to ancillary services.|
No person or entity may professionally provide the investment services or ancillary services listed in letters a), b), d) f), and g) above in relation to financial instruments unless they have been granted the mandatory authorization and are registered on the appropriate administrative registers. In addition, only the institutions authorized for that purpose may market investment services or solicit clients professionally, either directly or through regulated agents.
The legal regime for Investment Firms is contained in the Securities Market Law and in Royal Decree 217/2008. These pieces of legislation transpose into Spanish law the EU MiFID legislation14.
There are four types of Investment Firms:
- Broker-dealers (sociedades de valores): These are investment firms that can operate both for their own and for the account of others, and that provide the full range of investment and ancillary services. Their capital stock must be at least €730,000.
As of December 31, 2017, there were 43 broker-dealers registered on the CNMV’s Administrative Register15.
- Brokers (agencias de valores): Investment firms that can only operate professionally for the account of others, with or without representation, and that provide the full range of investment services except for those described in letters c) and f) below, and the full range of ancillary services except for those mentioned in letter b).
Their capital stock will depend on the activities they pursue. As a general rule, their share capital cannot be less than €125,000. However, brokers which are not authorized to take deposits of funds or transferable securities from their clients are able to have a share capital of €50,000.
As of December 31, 2017, there were 47 brokers registered on the CNMV’s Administrative Register.
- Portfolio management companies (sociedades gestoras de carteras): These investment firms can only provide the investment services described in letters d) and g) and the ancillary services described in letters c) and e). They are required to have (I) an initial capital of €50,000; or (II); a professional indemnity insurance, surety or some other comparable guarantee against liability arising from professional negligence, covering the whole territory of the European Union and providing coverage of at least €1,000,000 applying to each claim and in aggregate €1,500,000 per year for all claims; or (III) a combination of initial capital and professional indemnity insurance in a form resulting in a level of coverage equivalent to that referred to in points (I) and (II) above.
As of December 31, 2017, there were 1 portfolio management companies registered on the CNMV’s Administrative Register.
- Financial advisory firms (empresas de asesoramiento financiero): These are individuals or legal entities that can only provide the investment services listed in letter g) and the ancillary services indicated in letters c) and e). In the case of legal entities, they must have (I) initial capital of €50,000, or (II) a civil liability insurance policy that covers the entire territory of the European Union, a guarantee or other comparable guarantee, with a minimum coverage of €1,000,000 for claims for damages, and a total of €1,500,000 per year for all claims, or (III) a combination of initial capital and a professional civil liability insurance policy that gives rise to coverage equivalent to that described in points (I) and (II) above.
As of December 31, 2017, there were 173 financial advisory firms registered on the CNMV’s Administrative Register.
In addition, credit institutions may provide on a regular basis the full range of investment and ancillary services where their legal regime, their bylaws and their specific authorization enables them to do so. Likewise, collective investment scheme management companies (SGIICs) may provide certain investment and ancillary services provided that they are authorized to do so.
The conditions for taking up business can be summarized as follows:
- Internal organization: The Securities Market Law and Royal Decree 217/2008 are very exhaustive on the internal organization requirements that investment firms must meet.
- Authorization and registration: It falls to the CNMV to authorize investment firms.
In order to secure authorization as an investment firm, the following broad requirements must be met:
- Its sole corporate purpose must be to engage in the specific activities of investment firms.
- It must take the form of a corporation, incorporated for an indefinite term, and the shares comprising its capital stock must be registered shares.
- The minimum capital stock must be fully paid in in cash.
- It must have a board of directors made up of no fewer than three members.
- The chairmen, deputy chairmen, directors or administrators, general managers and persons holding equivalent positions are required to be of good repute and to have the knowledge and experience necessary for the performance of their functions, and be committed to the good governance of the investment firm. In the case of the parent companies of investment firms, the honorability requirement also applies to the chairmen, deputy chairmen, directors or administrators, general managers and persons holding equivalent positions and a majority of the members of the board of directors are required to have the knowledge and experience required for the performance of their functions.
The requirements with respect to good repute, knowledge and experience also apply to the persons in charge of the internal control functions and to those holding other positions which play a key part in the day-to-day pursuit of the activities of an investment firm and its parent company.
- It must have an internal code of conduct.
- It must join the Investment Guarantee Fund where so required.
- It must have presented a business plan reasonably evidencing that the investment firm’s project is viable in the future.
- It must have submitted appropriate documentation on the conditions and the services, functions or activities to be subcontracted or outsourced, to permit verification that this fact does not invalidate the requested authorization.
2.5.2. The regime governing significant holdings and changes of control at investment firms
Pursuant to the regime governing significant holdings for investment firms, they must notify the CNMV, for its preliminary assessment, of any acquisitions amounting to more than 10% of capital or of voting rights, and of any significant holding that is increased so that the percentage of capital or voting rights becomes equal to or greater than 20%, 30% or 50%, or control of the firm is acquired. In addition, any individual or legal entity that has decided to dispose, directly or indirectly, of a significant holding in an investment firm, must first notify the CNMV of such circumstance.
Also, any individual or legal entity that, alone or acting in concert with others, has acquired, directly or indirectly, a holding in a Spanish investment firm, so that the percentage of voting rights or of capital that they hold is equal to or greater than 5%, must give immediate written notice to the CNMV and to the investment firm in question, indicating the amount of the resulting holding.
2.5.3. Cross-border activities of investment firms
- Spanish investment firms may provide, in other EU Member States, the investment services and ancillary services for which they are authorized, either through a branch or under the freedom to provide services, subject to the fulfillment of the established legal formalities.
- Investment firms authorized in another EU Member State may provide investment and ancillary services in Spain, either by opening a branch or under the freedom to provide services, subject to the statutory notification procedure.
- Non-EU investment firms intending to open a branch in Spain or to operate under the freedom to provide services are subject to the authorization procedure.
2.6 Closed-ended type Collective Investment Entities
Law 22/2014, of November 12, 2014, regulating venture capital entities, other closed-ended type collective investment entities and the management companies of closed-ended type collective investment entities, and amending Law 35/2003, of November 4, 2003 on collective investment schemes (“Law 22/2014”) amends the law on venture capital entities in Spain, by repealing Law 25/2005, of November 24, 2005, on venture capital entities and their management companies.
The term “closed-ended type investment” is defined as that performed by venture capital entities and other collective investment entities at which, in accordance with their divestment policies, (I) all divestments by their members or unit-holders must take place at the same time, and (II) the sums received in respect of divestment must be received according to the amount due to each member or unit-holder by reference to the rights they hold under the terms established in the bylaws or regulations.
Closed-ended type collective investment must be carried out in Spain by two types of entities:
- “Venture capital entities” or “ECR” (Entidades de Capital Riesgo with a similar definition to that provided in Law 25/2005), which can take the form of funds (“FCR” – Fondos de Capital Riesgo) or companies (“SCR” – Sociedades de Capital Riesgo); and
- Other types of entities which the Law 22/2014 calls “closed-ended type collective investment entities” (“EICC”– Entidades de Inversión Colectiva de Tipo Cerrado), a new vehicle created by the Law 22/2014 which are defined as collective investment entities which, without having any commercial or industrial purpose, obtain capital from a number of investors, through marketing activities, to invest it in all types of assets, financial or otherwise, subject to a predefined investment policy. Closed-ended type investment entities can be either funds (“FICC”) or companies (“SICC”). This new type of entity will include any companies that might have been operating in Spain by investing in non-listed securities but failed to meet the requirements under the regime for investments and diversification of venture capital.
Both types of entities must be managed by an authorized management company in accordance with the Law 22/201416. The basic difference between venture capital entities (ECRs) and closed-ended type collective investment entities (EICCs) is that venture capital entities have a smaller investment scope than closed-ended type collective investment entities. Mirroring the requirement in the now repealed Law 25/2005, venture capital entities have to restrict their investment activities to acquiring temporary interests in the capital of enterprises other than real estate or financial enterprises which, when the interest is acquired are not listed on a primary stock market or on any other equivalent regulated market in the European Union or of the in any other OECD member participants, whereas, as mentioned above, closed-ended type collective investment entities can invest in “all types of assets, financial or otherwise”.
At December 31, 2017, there were 14 SICCs and 2 FICC entered on the CNMV’s Administrative Register.
Law 22/2014 also regulates three new types of entities:
- European venture capital funds (“EVCF”), subject to the rules in Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013, on European venture funds. They must be registered in the register set up for them at the CNMV; and
- European social entrepreneurship funds (“ESEF”), subject to the rules contained in Regulation (EU) No 346/2013 of the European Parliament and of the Council of 17 April 2013 on European social entrepreneurship funds. They must be entered in the register set up for them at the CNMV.
- It creates a special type of SME venture capital entity, an “ECR-Pyme”, taking the form of either SME venture capital companies (SCR-Pyme) and SME venture capital funds (FCR-Pyme) (art. 20 Law 22/2014). These must hold, at least, 75% of their computable assets in certain financial instruments providing funding to small and medium-sized enterprises meeting a number of requirements at the time of the investment.
Therefore, Law 22/2014 regulates the legal regime of such entities as well as marketing regime of their shares or units in Spain and abroad.
Collective investment entity management companies are Spanish corporations (sociedades anónimas) whose corporate purpose is to manage the investments of one or more venture capital entities and/or closed-ended type collective investment entities, and monitor and manage their risks. Each venture capital entity and closed-ended type collective investment entity will have only one manager which must be a collective investment entity management company. Venture capital companies and closed-ended type collective investment companies can act as their own management company (“self-managed companies”).
A description has been provided of the activities that can be carried on by collective investment entity management companies (there are some specific provisions in relation to self-managed companies and certain restrictions have been imposed), and a distinction is drawn between:
- Primary activity: investment portfolio management and risk monitoring and management with respect to the entities they manage (venture capital entity, closed-ended type collective investment entities, European venture capital funds or European social entrepreneurship funds).
- Additional activities: administrative and marketing tasks and activities related to the entity’s assets.
- Ancillary services: discretionary investment portfolio management, advisory services on investment, safe-keeping and administration of the units and shares of venture capital entities and closed-ended type collective investment entities (and, if applicable, European venture capital funds and European social entrepreneurship funds) and receipt and transmission of orders of customers in relation to one or more financial instruments.
A strict regime for obtaining the CNMV’s authorization is established. Additionally, the CMNV must be notified of any significant change to the circumstances in which the original authorization was granted.
2.7 Insurance and reinsurance companies and insurance intermediaries
In light of the security it provides to individuals and traders and the positive role it plays in encouraging and channeling savings into productive investments, the insurance industry is subject to comprehensive legal regulations and tight administrative control. In this regard, insurers are required to invest part of the premiums they receive in assets that ensure security, profitability and liquidity.
The industry is supervised by the Directorate-General of Insurance and Pension Funds (DGS), attached to the Ministry of Economy and Business, and the basic legal regime for insurance in Spain is as follows:
- Insurance firms:
- The legislation on insurance firms is contained in Law 20/2015 of Julyr 14, 2015 on the Regulation, Supervision and Solvency of insurance and reinsurance entities, and Royal Decreer 1060/2015 of November 20, 2015 on the regulation, supervision and solvency of insurance and reinsurance entities, which contain, in revised form, the provisions of the previous legislation which remain in force, the new solvency system introduced by the so-called Solvency II Directive (Directiver 2009/138/EC of the European Parliament and of the Council of Novemberr 25, 2009) and other rules intended to bring the legislation into line with the sector’s development.
- The legislation on insurance intermediaries is contained in Private Insurance and Reinsurance Intermediation Law 26/2006, of July 17, 2006.
- The legislation on insurance contracts is contained in the Insurance Contract Law 50/1980, of October 8, 1980.
- An insurer is a company that engages in the business of performing direct insurance transactions and which may also accept reinsurance transactions in the lines for which it is authorized to do direct insurance business. This is an exclusive and excluding business, that is, insurance contracts can only be formalized by insurers that are duly authorized by the Ministry of Economy and Business and registered on the register of the DGS, and insurers cannot perform transactions other than those defined in the above-mentioned insurance legislation. In this respect, the applicable legislation has established a specific authorization procedure for entities wishing to engage in these activities.
Insurance entities are permitted to adopt the form of a corporation (sociedad anónima), a European public limited liability company (sociedad anónima europea), a mutual insurance company (mutua de seguros), a cooperative society (sociedad cooperativa), a European cooperative society (sociedad cooperativa europea), or a welfare mutual insurance company (mutualidad de prevision social). Prior administrative authorization is required to operate in each line of insurance, which authorization implies registration on the register of insurance entities of the DGS. Foreign insurers are permitted to operate in Spain through a branch or under the freedom to provide services, if they are domiciled in other countries of the European Economic Area, and through a branch if they are domiciled in third countries.
The Spanish insurance industry continues to be characterized by the co-existence of a certain degree of concentration of the business volume in highly-competitive lines and types of insurance (life, health, motor, multi-risk insurance) which require considerable size in terms of assets and administration, with the dispersion of a minimum part of that business volume among a large number of entities operating in other types of insurance which do not require such size.
On the other hand, reinsurance entities are entities that undertake to reimburse insurers for the obligations they may hold vis-à-vis third parties under arranged insurance contracts, and which are covered by reinsurance. Reinsurance business can be undertaken in Spain by Spanish reinsurance companies whose sole corporate purpose is to arrange reinsurance, insurance entities themselves with respect to classes of insurance for which they are authorized and, lastly, foreign reinsurance entities which are domiciled in another country from the Economic European Area (under the freedom to provide services or through branches in Spain) or in third countries, in this latter case, either through a branch established in Spain or from the country in which their registered office is located (but not from branches located outside Spain).
The following table shows the changes in the numbers of operating Spanish insurance and reinsurance entities. The figures are broken down between direct insurance entities and pure reinsurance entities and, within the former category, by the various legal forms they take. There are currently no insurance cooperatives on the register17 (Table 7).
|DIRECT INSURANCE ENTITIES|
|TOTAL DIRECT INSURANCE ENTITIES||294||292||285||277||268||262||252||237||228|
|TOTAL INSURANCE AND REINSURANCE ENTITIES||296||294||287||279||270||264||255||240||231|
Insurance intermediaries are individuals or legal entities that, being duly entered in the DGS’s special administrative register of insurance intermediaries and brokers and their senior officers, pursue the mediation between insurance or reinsurance policyholders, on the one hand, and insurance or reinsurance entities, on the other. The following are mediation activities:
- Introducing, proposing or carrying out work preparatory to the conclusion of insurance or reinsurance contracts.
- Concluding insurance and reinsurance contracts.
- Assisting in the administration and performance of such contracts, in particular in the event of a claim.
Intermediaries are classified as follows:
- Insurance agents: individuals or legal entities that conclude an agency agreement with an insurance entity. Insurance agents may be:
- Exclusive insurance agents: they carry on the activity of insurance mediation for one insurance entity on an exclusive basis, unless the insurance entity authorizes the agent to operate solely with a different insurance entity in certain lines of insurance in which the authorizing entity does not operate.
- Tied insurance agents: they carry on the activity of insurance mediation for one or more insurance entities.
- Bancassurance operators: these are credit institutions, credit financial establishments or companies owned or controlled by them that carry on the activity of insurance mediation through an insurance agency contract for one or more insurance entities using the distribution networks of the credit institutions or credit financial establishments (in the case of companies owned or controlled by credit institutions or credit financial establishments, such entities are required to have assigned their distribution networks to the investee or controlled company for insurance distribution purposes). The bancassurance operators may be exclusive or non-exclusive.
- Insurance brokers: individuals or legal entities that carry on the commercial activity of private insurance mediation without any contractual ties to insurance entities and that offer independent, professional and impartial advice to the client.
- Reinsurance brokers: individuals or legal entities that carry on the activity of mediation in relation to reinsurance transactions.
In the event of acquisition of holdings amounting to 5% of the share capital or the voting rights of a Spanish insurance or reinsurance entity, the DGS is required to be informed within a maximum of ten business days counted as from the acquisition date. In cases of acquisition of significant holdings (i.e. those amounting directly or indirectly to 10% of share capital or voting rights) or increases in holdings which bring them up to or over the limits of 20%, 30% or 50%, or when the acquisition may result in the control of a Spanish insurance entity, reinsurance entity or insurance brokerage being assumed, the transaction can only go ahead if the DGS has not objected to it. Where a holding makes it possible to exert a notable influence on the management of the insurance entity, reinsurance entity or insurance brokerage, it will also be considered a significant holding even if it does not amount to 10%.
2.8 Pension plans and funds
The insufficiency of the Spanish social security system, and the threat of a potential crisis in the system, prompted the sentiment that social security benefits, especially retirement benefits, would have to be supplemented. Thus saving and funded pension plans emerged to ensure an adequate pension upon retirement. In 1987 the Pension Plan and Fund Law introduced in Spain a savings arrangement that has given rise to a solid long-term instrument through which investors can provide for the future. This Law resulted in the institutionalization of pension plans sponsored by employers, certain associations and financial institutions.
The savings are invested in a pension fund and are returned, capitalized, upon retirement, death, death of a spouse, orphanhood, permanent and absolute inability to work in the regular occupation or permanent and absolute inability to work, and complete disability or severe or complete dependency of the participant. This system is of great social import, since it ensures future income for the participant or beneficiary. Moreover, pension funds have high investment potential as they have to invest the funds they receive, which gives them great financial power.
The current legislation on pension plans and funds is contained in the Revised Pension Plan and Fund Law, approved by Legislative Royal Decree 1/2002, and in Royal Decree 304/2004 approving the Pension Plan and Fund Regulations.
A pension plan is a contract that regulates the obligations and rights of the parties to it (participants, sponsors and beneficiaries) with the aim of determining the benefits that the participant or the beneficiary is entitled to, the conditions of that entitlement and the manner in which the plan is financed. These plans are based on contributions of savings which, duly capitalized, ensure future pensions.
The various characteristics of pension plans include, most notably, their favorable tax treatment and the restrictions on being able to draw out any of the accumulated savings prior to the occurrence of the contingency covered, except in cases of long-term unemployment or serious illness. With the entry into force of the Royal Decree 62/2018, holders of any form of pension may be able to draw out the savings related to contributions made at least 10 years ago.
Pension plans, regardless of their type, must necessarily be included in a pension fund, which are asset pools without separate legal personality created for the sole purpose of complying with pension plans, and are the investment instrument for the savings. All financial contributions from the sponsors and from the plan participants must be immediately and necessarily included in the position account of the plan in the pension fund, out of which any benefits arising under the plan will be paid.
A pension fund has no legal personality and must be administered, necessarily, by a management company, which keeps its accounting records, selects its investments and orders the depositary to purchase and sell assets. The following may be management companies:
- Corporations formed for this sole purpose and which have obtained the prior administrative authorization required.
- Life insurance companies authorized to operate in Spain which have obtained the prior administrative authorization required in order to manage pension funds.
In order to set up a pension fund, prior authorization from the Ministry of Economy and Business and registration of the corresponding public deed at the appropriate Commercial Registry are required.
With regard to the investments made by pension funds, the regulations currently in force have aimed to lend greater legal certainty to the investment process, with measures to encourage transparency in investment and the supply of information to participants.
In this respect, the applicable legislation has established a specific authorization procedure for entities wishing to engage in these activities.
At the end of 2016, the number of pension plans appearing in the DGS Register totaled 2,800, compared with 2,805 the year before18, which represents a decrease of 0.18%.
Regarding the number of pension plans, only increase the individual pension plans (0.55%) against the decline in the employment plans (- 0.52%) and associated plans (- 2.72%). On the other hand, the number of participants has slightly decreased in 2016 compared to the previous year (by 4.4%, from 9,908,788 to 9,865,260). Of the total of participants, 78.65% are individual plans participants, 20.69% are participants of employment plans and 0.66% are participants of associated plans.
The evolution of the contributions in 2016 has depended on the mode of plan, noting an increase of 2.30% as a whole with respect to 2015. Thus, the employment plans decreased in contributions following the existing downward trend from 2010 and that it seemed to have changed with the increase of contributions in 2015. Of the contributions made in 2016 to the employment plans, 81.12% of them come from contributions of the promoter. The contributions to the Individual pension plans have increased 3.57% in comparison to 2015. Contributions to the associated pension plans have remained stable according to the previous year.
The assets managed by Pension Funds increased 2.37% thanks to the improvement in the situation of financial markets and of the economy in general. At December 31, 2016, assets managed by Pension Funds amounted to 106,466 million euros.
The table below shows the changes in pension funds in Spain by number of registered pension funds and managed assets (Table 8).
|Year||Registered Funds||Assets (€ millions)|
The number of management companies entered at December 31, 2015 in the DGS Administrative Register totaled 82 whereas the number of management companies registered at December 31, 2016 was 77.
2.9 Securitization vehicles
In general, securitization consists of the conversion of collection rights into standardized fixed-income securities for possible subsequent trading on regulated securities markets, where they can be purchased by investors.
Securitization is Spain is carried out through securitization funds (“Securitization Funds” or “SF”). The SF is a separate pool of assets that has no legal personality, with a net asset value of zero, whose assets are made up of present or future collection rights, grouped in the manner indicated in Law 5/2015, and whose liabilities are made up of the fixed-income securities which they issue and of credit facilities granted by any third party.
Securitization funds are regulated by Law 5/2015.
SFs can be set up as closed-end funds (in which neither the assets nor the liabilities of the fund change after it is formed) and open-end funds (in which their assets and/or liabilities may be modified after they are formed).
Asset securitization vehicles are managed by specialized management companies (“securitization fund managers”) whose purpose is the formation, administration and legal representation of the fund and of banking asset funds in the terms envisaged in Law 9/2012 of November 14, 2012 on the Restructuring and Resolution of Credit Institutions. Management Companies can also set up, manage and represent funds and special purpose vehicles equivalent to securitization funds which are set up abroad in accordance with whatever legislation may be applicable.
1 Until the promulgation of Law 5/2015 of April 27, 2015 on the Promotion of Business Financing (“Law 5/2015”), which has brought changes to the regime governing securitization funds in Spain, a distinction was drawn between mortgage securitization funds and asset securitization funds. This distinction has been eliminated in the new Law, which now refers to securitization funds as a single concept (without prejudice to those mortgage securitization funds and asset securitization funds created prior to Law 5/2015 and which remain in existence).
3 As a result of the credit institution restructuring process, almost all the savings banks have agreed to separate their financial activities from their community welfare activities, so that today the community welfare activities are carried out by foundations and the financial activities by credit institutions (typically banks) owned by the savings banks.
4 Source: CECA
5 “Significant holding” means a holding in a Spanish credit institution that amounts, directly or indirectly, to at least 10 percent of the capital or voting rights of the institution. Where a holding makes it possible to exert a notable influence at the institution, it will also be considered a significant holding even if it does not amount to 10%.
6 In the terms described in sections 2.3.2 and 2.3.3 del presente Anexo.
7 Payment institutions have their origin in currency-exchange bureaux.
9 Modified by Directive 2014/91/EU of the European Parliament and of the Council of 23 July 2014 amending Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration policies and sanctions.
10 Directive 2011/61/EU of the European Parliament and of the Council of June 8, 2011, on alternative investment fund managers, lays down the rules applicable to the ongoing operation and transparency of the managers of alternative investment funds which manage and/or market alternative investment funds throughout the EU. Royal Decree 1082/2012, of July 13, 2012, approving the implementing regulations of Law 35/2003, introduced some of the new requirements set forth under Directive 2011/61/EU. In addition, on November 13, 2014, the Official State Gazette published Law 22/2014, of November 12, 2014, regulating venture capital entities, other closed-ended type collective investment entities and the management companies of closed-ended type collective investment entities, and amending Law 35/2003, of November 4, 2003 on collective investment schemes the main purpose of which is to transpose Directive 2011/61/EU, on Alternative Investment Fund Managers into Spanish law.
11 Subject to the requirements laid down in Directive 2011/61/EU.
12 SGIICs may be exempt from compliance with some of the obligations of the Law, as provided for in the regulations, where they meet the following requirements: they only manage investment firms and the managed assets are less than a) €100 million, including assets acquired by using leverage; or b) €500 million where the investment firms they manage are not leveraged and have no right of reimbursement that may be exercised during a period of five years after the date of initial investment.
13 Where “significant holding” means a holding in a SGIIC that amounts, directly or indirectly, to at least 10% of the capital or voting rights of the institution. Where a holding makes it possible to exert a notable influence at the institution, it will also be considered a significant holding even if it does not amount to 10%.
14 It should be noted that in 2014, Directive 2014/65/EU of the European Parliament and of the Council, of 15 May 2014, on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II), which repeals Directive 2004/39/EC of the European Parliament and of the Council, of 21 April 2004, on markets in financial instruments (MiFID I) and a new Implementing Regulation (MiFIR), which replaces the former legislation 648/2012, were approved. However, to date, MiFID II has not yet been transposed into Spanish legislation.
16 In the case of the SCR and the SICC, the company itself can act as management company, if its managing body decides not to designate an external manager. These “self-managed” SCRs and SICCs are subject to the regime set out in Law 22/2014 for SGEICs, on which further information is provided in point 2.6.2 below
18 The differences between the information given in previous and the present year are because of the constant revisions and actualizations of the data found in the registries of the DGS.