Introduction
Eligible credit institutions
Characteristics of the securities
Fees
Application
In 2008 the Spanish government, following the Eurozone plan to lessen the impact of the international financial crisis on credit institutions, established a guarantee programme for credit institutions' debt issues in order to allow such entities access to the capital markets.
As a result of the recent Eurozone sovereign debt crisis and the fact that a considerable number of credit institutions' debt issues will be due in 2012, in December 2011 the European Council adopted new measures to be implemented by member states. The purpose of these measures is to reinforce the equity of large credit institutions and to provide member states with an effective and coordinated guarantee system that will give credit institutions easier access to medium and long-term financing.
Within this framework, the Spanish government passed Royal Decree-Law 20/2011 on December 30 2011, which implements urgent budget, tax and financial measures intended to correct the public deficit. This law establishes, among other things, a programme that guarantees credit institutions' debt issues by up to €100 billion.
On February 1 2012 the Spanish finance minister published Regulation ECC/149/2012, which stipulates the requirements and proceedings that credit institutions must follow to obtain a guarantee under the programme.
Credit institutions that wish to join the guarantee programme must:
- be domiciled in Spain;
- have a minimum quota of one per 1,000 of the Spanish loan market; and
- have issued securities that could have been secured by guarantee between 2007 and 2011, regardless of whether a guarantee was in fact obtained during this time.
In the case of consolidated groups, the first and third requirements must be fulfilled by at least one entity in the group. The second requirement must be met by all entities in the group, but only including the amounts related to entities domiciled in Spain. A group may ask for only one guarantee, except in cases where another credit institution within the group complies with the above requirements and has a minimum quota of least five per 1,000.(1)
Characteristics of the securities
Securities covered under the guarantee programme should be non-subordinated and not covered by any other guarantee. In addition, securities must:
- be issued before June 30 2012;
- mature within one to five years, with either a fixed or variable interest rate; and
- adhere to a bullet repayment structure.
The issue will not include options, derivatives or any other element that would make risk valuation difficult. Each issue must be for no less than €10 million and must be listed on Spanish official secondary markets.
The guarantee will accrue the following fees:
- a granting fee of 0.5% of the amount of the guarantee, to be paid when the guarantee is granted and before any debt issue; and
- an issue fee to be determined by the General Treasury Secretariat and to be paid under each guaranteed securities issue, before the securities are issued.
Applications for the guarantee should be submitted to the General Treasury Secretariat in accordance with a form attached to the regulation. Only one application per credit institution or consolidated group should be submitted, unless institutions within the same consolidated group are applying for separate guarantees.
The application period ran from February 2 to February 6 2012.
For further information on this topic please contact Javier Ybáñez or José Luis Palao at Garrigues Abogados & Asesores Tributarias by telephone (+34 91 514 5200), fax (+34 51 399 2408) or email ([email protected] or [email protected]).
Endnotes
(1) In contrast to the 2008 guarantee programme, it is no longer required that the credit institution requesting the guarantee be the one holding the highest credit rating among the entities belonging to the group.