Financial assistance to Spain

SUMMARY OF:

Decision 2012/443/EU – specific measures to reinforce financial stability in Spain

WHAT IS THE AIM OF THE DECISION?

It approved a financial assistance programme to help Spain recapitalise and restructure its banking sector.

KEY POINTS

The financial assistance programme agreed by euro-area finance ministers in July 2012 provided financing by euro-area countries to Spain of up to €100 billion for 18 months.
Spain had used only around €38.9 billion of the aid to recapitalise its banks and a further €2.5 billion to capitalise the Spanish investment management company, Sareb, when the programme ended in January 2014.
In exchange for the aid, Spain, in consultation with the European Central Bank (ECB), the European Banking Authority (EBA) and the International Monetary Fund, had to:
- identify the capital needs of individual banks by carrying out a comprehensive asset quality review of the sector and bank-by-bank stress tests;
- recapitalise, restructure and/or carry out an orderly resolution of weak banks, while minimising the cost for taxpayers;
- separate out the bad assets of banks receiving public support and transfer them to the investment management company Sareb;
- strengthen its regulatory and supervisory systems and reinforce governance.
Every 3 months, the European Commission, the ECB and the EBA checked that Spain was carrying out the conditions attached to the aid.
After Spain left the programme in December 2013, the Commission continued to monitor the Spanish economy and its financial sector under the post-programme surveillance measures set out in Regulation (EU) No 472/2013.
Spain is currently subject to the European Union’s (EU) post-programme surveillance. Under this arrangement, the Commission, liaising with the ECB:
- carries out regular visits to the country to monitor the Spanish economy and its financial sector;
- prepares half-yearly reports to monitor progress on relevant policies and determine whether further measures are needed.
The surveillance will continue until Spain has repaid at least 75% of the loans that it received.

FROM WHEN DOES THE DECISION APPLY?

It has applied since 24 July 2012.

BACKGROUND

On 25 June 2012, the Spanish government requested external financial assistance under the terms of the financial assistance programme for the recapitalisation of financial institutions by the European Financial Stability Facility.

The Heads of State and Government at the Euro Area Summit of 29 June 2012 agreed that the assistance would subsequently come from the European Stability Mechanism, but without gaining the same top priority for repayment as other European Stability Mechanism loans. The memorandum of understanding was signed on 23 July. Its full implementation took into account all other relevant considerations contained in the Euro Area Summit statement of 29 June 2012.

The operation of the programme was closely monitored by the Commission and the ECB; also partly by the EBA and the European Financial Stability Facility. The International Monetary Fund was also closely involved.

For further information, see:

The Financial Sector Adjustment Programme for Spain (European Commission)
Post-programme surveillance for Spain (European Commission).

MAIN DOCUMENT

Council Decision 2012/443/EU of 23 July 2012 addressed to Spain on specific measures to reinforce financial stability (OJ L 202, 28.7.2012, pp. 17–20).