Banking Law and EU Delegated Acts in Banking Regulation in Spain

Introduction

EU delegated acts are an important part of modern banking regulation in Spain. Much of Spanish banking law now operates within the broader European Union financial regulatory system. The European Parliament and the Council adopt the main legislative rules, while the European Commission may be empowered to adopt more detailed rules supplementing or amending certain non-essential elements of that legislation.

The constitutional basis is Article 290 of the Treaty on the Functioning of the European Union (TFEU). It allows a legislative act to delegate power to the European Commission to adopt non-legislative acts of general application. The underlying legislative act must specify the objectives, content, scope and duration of the delegation.

For Spanish banks, delegated acts are especially important because EU banking legislation is technically complex. Detailed rules concerning capital, liquidity, prudential consolidation, risk calculations, disclosure, resolution and financial-market activities cannot realistically all be contained in the basic legislative acts.

Legal Basis: Article 290 TFEU

Article 290 TFEU establishes the constitutional foundation for delegated acts.

A legislative act may delegate to the Commission the power to adopt non-legislative acts of general application that supplement or amend non-essential elements of the legislative act.

Two limitations are particularly important.

First, essential elements must remain in the legislative act itself. Parliament and the Council cannot transfer fundamental political choices to the Commission.

Second, the legislative act must define the boundaries of the delegated authority.

The Parliament or Council may also have powers to revoke the delegation or object to a delegated act according to the conditions established in the basic legislation.

This structure maintains democratic oversight while permitting technically detailed financial regulation.

Delegated Acts and Spanish Banking Law

Spain cannot treat valid EU delegated regulations as merely optional regulatory guidance.

Where a Commission delegated act takes the form of an EU regulation and becomes applicable, it forms part of the EU legal framework directly applicable in Spain according to EU law.

Consequently, Spanish credit institutions may simultaneously have to consider:

Spanish national law, particularly Law 10/2014 on the organisation, supervision and solvency of credit institutions;

EU legislative acts, such as the Capital Requirements Regulation;

Commission delegated regulations supplementing those legislative acts;

Regulatory and implementing technical standards where applicable; and

supervisory requirements and guidance issued within the European banking supervisory architecture.

The result is a multi-layered regulatory system.

Delegated Acts under the Capital Requirements Framework

The Capital Requirements Regulation (CRR) and related EU banking legislation contain numerous empowerments allowing detailed regulatory requirements to be developed.

Delegated legislation can address highly technical questions connected with prudential regulation, including aspects of:

capital requirements;

own funds;

credit and counterparty risk;

market risk;

operational risk;

liquidity;

prudential consolidation;

large exposures;

disclosure; and

other technical calculations.

These detailed measures are important because apparently small differences in definitions or calculation methods can substantially affect a bank's regulatory capital position.

Role of the European Banking Authority

The European Banking Authority (EBA) is highly important in the technical rule-making process, although it should not simply be equated with the Commission.

Under various financial-sector legislative frameworks, the EBA may prepare draft regulatory technical standards or provide technical expertise. The Commission then exercises the powers assigned to it under the applicable legislative framework.

This institutional arrangement combines specialist banking expertise with the Commission's formal regulatory authority.

The final legal effect depends upon the particular instrument adopted and its legal basis.

Delegated Acts Compared with Implementing Acts

Delegated and implementing acts must be distinguished.

Delegated acts under Article 290 TFEU supplement or amend non-essential elements of legislation.

Implementing acts under Article 291 TFEU are used where uniform conditions for implementing legally binding EU acts are required.

The distinction is constitutionally important.

A delegated act can develop the regulatory framework within the limits established by the legislature, while an implementing act is directed toward uniform execution of rules already established.

Banking regulation contains both types because it requires both detailed rule development and uniform implementation.

Regulatory Technical Standards

EU financial regulation also makes extensive use of Regulatory Technical Standards (RTS).

RTS are highly technical instruments used to specify detailed requirements established by primary EU financial legislation. European supervisory authorities may prepare drafts under the relevant statutory mandates.

These instruments can deal with matters such as methodologies, reporting requirements, risk measurements and technical definitions.

Once adopted in the appropriate legally binding form, they can have significant consequences for Spanish banks.

They are not merely optional industry recommendations.

Example: Short-Selling Delegated Regulation

The operation of delegated legislation can be illustrated by the EU short-selling framework.

Regulation (EU) No 236/2012 empowered the Commission to supplement parts of the legislative regime. Commission Delegated Regulation (EU) No 918/2012 consequently specified matters including definitions, calculation of net short positions, covered sovereign credit-default swaps, notification thresholds, liquidity thresholds and significant falls in financial-instrument values.

This demonstrates the basic model: the legislature determines the substantive framework and delegates limited technical elaboration to the Commission.

Commission Delegated Regulation (EU) 2022/27 later adjusted the relevant notification threshold for significant net short positions, illustrating how delegated powers can also permit specified regulatory parameters to be updated.

Democratic Control

Delegated acts do not give the Commission unlimited legislative authority.

The European Parliament and Council determine the original delegation. The enabling legislation defines what the Commission may regulate.

Depending on the underlying legislative provision, Parliament or Council can exercise control mechanisms such as objection or revocation.

Furthermore, delegated acts can be reviewed by the EU courts.

These safeguards are important in banking regulation because apparently technical requirements can produce substantial economic consequences.

Application in Spain

For Spain, EU delegated regulations help establish uniform banking standards across Member States.

Without European technical harmonization, Spain could calculate certain prudential requirements differently from France, Germany, Italy or other Member States.

Such differences could distort competition and encourage regulatory arbitrage.

Uniform delegated rules therefore support the EU Single Rulebook, under which banks across Member States operate according to increasingly harmonized prudential requirements.

Spanish authorities nevertheless retain important responsibilities for supervision, enforcement and national matters falling outside complete EU harmonization.

Role of the Bank of Spain and ECB

The Bank of Spain must apply the relevant EU regulatory framework when carrying out responsibilities within its competence.

For significant Spanish credit institutions, the European Central Bank exercises direct prudential supervisory responsibilities through the Single Supervisory Mechanism.

Consequently, delegated acts can affect the standards used by both European and national supervisors.

A Spanish bank cannot generally defend non-compliance by arguing that a detailed requirement originated from a Commission delegated regulation rather than the basic legislative regulation, provided that the delegated act is valid and applicable.

Case Laws and Judicial Principles

There is not a separate large body of litigation exclusively described as “Spanish banking delegated-act cases.” The relevant principles instead come primarily from CJEU jurisprudence concerning delegation, EU agencies, implementing powers and the distinction between legislative and non-legislative acts.

1. Meroni v High Authority — Cases 9/56 and 10/56

The Meroni judgments established foundational limits on the delegation of powers within the European institutional system.

The Court distinguished between clearly defined executive powers subject to objective criteria and broad discretionary powers capable of involving substantial policy choices.

The latter type of uncontrolled delegation was considered problematic because it could alter the institutional balance established by the Treaties.

Meroni remains important when considering how much authority can be transferred to specialized EU financial bodies.

2. Romano — Case 98/80

In Romano, the Court addressed powers given to an administrative body and limits concerning the adoption of measures having normative effects.

The judgment became another important part of the traditional EU doctrine limiting delegation to bodies outside the Treaty institutions.

Its principles subsequently became relevant when the EU created powerful financial supervisory authorities.

3. United Kingdom v Parliament and Council (ESMA Short Selling) — C-270/12

This is one of the most important modern financial-regulation cases concerning delegated regulatory authority.

The United Kingdom challenged Article 28 of the Short Selling Regulation, arguing, among other things, that the powers granted to ESMA conflicted with the Meroni doctrine and Articles 290 and 291 TFEU. Spain intervened in support of the EU institutions.

The Court rejected the challenge. It found that ESMA's powers were sufficiently circumscribed by statutory conditions and criteria and were subject to judicial review.

The case is highly significant for Spain because it confirms that sophisticated EU financial regulation can lawfully confer carefully defined powers on European supervisory bodies.

4. Commission v Parliament and Council (Biocides) — C-427/12

This case addressed the distinction between delegated acts under Article 290 and implementing acts under Article 291 TFEU.

The Court recognized that the EU legislature possesses discretion in determining whether authority should be conferred through delegated or implementing powers, subject to judicial review.

Although the dispute was not a banking case, its constitutional principle applies directly to EU financial regulation.

The case helps determine whether a banking measure properly supplements legislation or merely provides conditions for its uniform implementation.

5. Parliament v Commission — C-65/13

This litigation further considered the Commission's exercise of delegated authority under Article 290 TFEU.

It reinforces the principle that the Commission must remain within the authority granted by the underlying legislative act.

For banking regulation, this means a delegated regulation cannot lawfully rewrite essential policy choices that Parliament and Council reserved to themselves.

6. Parliament v Commission — C-286/14

This case also contributed to the jurisprudence concerning the scope and control of delegated powers.

Its broader significance is that the legal characterization and permissible scope of Commission action depend on the empowerment created by the basic legislative measure.

In banking regulation, the Commission must therefore carefully respect the subject matter and limitations contained in the CRR, CRD-related legislation or another relevant legislative act.

7. Czech Republic v Commission — C-696/15 P

This litigation contributed to the broader judicial examination of Commission regulatory authority and the distinction between different forms of EU secondary action.

Its relevance to banking lies in the general requirement that the Commission act within powers lawfully conferred upon it.

Technical complexity does not create unlimited regulatory discretion.

8. Germany v Commission — C-240/90

This earlier institutional case concerned the limits of Commission powers and provides broader support for the principle that implementing authority must remain within the framework established by the legislature.

In banking regulation, the same constitutional principle prevents technical rule-making from becoming an unauthorized substitute for legislative decision-making.

Importance of C-270/12 for Spain

The ESMA Short Selling case deserves particular attention.

The underlying EU Short Selling Regulation sought to create a harmonized framework after Member States had adopted divergent measures during the financial crisis. The EU considered common rules necessary to protect market functioning and financial stability.

The Court emphasized that delegated or conferred financial powers can be acceptable where their exercise is restricted by objective conditions, the permitted measures are defined and judicial review remains available.

This reasoning supports the broader architecture through which highly technical financial regulation is administered across the EU, including Spain.

Judicial Review of Delegated Acts

Commission delegated acts are subject to judicial control.

If the Commission exceeds the power granted by the basic legislation, an appropriate action may challenge the validity of the measure before the EU courts.

National courts can also encounter questions concerning the validity or interpretation of EU regulatory measures and, where appropriate, use the preliminary-reference procedure under Article 267 TFEU.

This creates an important legal safeguard for Spanish banks.

Regulators possess substantial technical authority, but that authority remains constrained by the Treaties, enabling legislation and general principles of EU law.

Supremacy and Direct Applicability

Where a delegated act takes the form of an EU regulation, it is binding and directly applicable according to Article 288 TFEU.

Spain does not normally need to reproduce every provision through a separate national statute before it can operate.

This greatly strengthens banking harmonization.

A Spanish institution can therefore face detailed obligations originating directly from EU legislation rather than exclusively from Spanish statutes or regulations.

Benefits for Spanish Banking Regulation

Delegated acts provide several advantages.

They permit technical rules to be updated without reopening the entire legislative process.

They also promote consistent prudential standards throughout the internal market.

Specialist technical expertise can be incorporated into regulation while Parliament and Council retain control over essential policy decisions.

For Spanish banks operating internationally, greater consistency can reduce some regulatory differences between Member States.

Legal and Constitutional Risks

Delegated legislation nevertheless creates important concerns.

Extremely detailed financial regulation can become difficult for smaller institutions to interpret and implement.

There is also a constitutional concern if apparently “technical” regulation begins making major political or economic choices that should have remained with the legislature.

Another challenge is regulatory volume. Banks must monitor the basic legislative text together with amendments, delegated regulations, technical standards and supervisory materials.

Effective compliance therefore requires continuous regulatory governance.

Practical Compliance for Spanish Banks

Spanish banks should maintain a structured system for monitoring EU delegated legislation.

When a new delegated act is adopted, the institution should identify its legal basis, effective date, affected business areas and interaction with existing policies.

Compliance, legal, risk, finance and technology functions may all need to participate.

Banks should particularly assess whether a delegated act changes capital calculations, reporting obligations, risk models, disclosure requirements, liquidity management or governance procedures.

Conclusion

EU delegated acts are an essential component of banking regulation in Spain. Under Article 290 TFEU, Parliament and Council may empower the European Commission to supplement or amend non-essential elements of EU legislation while retaining control over essential legislative choices.

In banking, this mechanism supports the highly technical EU Single Rulebook and allows detailed requirements to be developed under legislation such as the CRR and other financial-sector regulations.

The jurisprudence beginning with Meroni and Romano, followed by cases such as United Kingdom v Parliament and Council (C-270/12), Commission v Parliament and Council (C-427/12), Parliament v Commission (C-65/13), Parliament v Commission (C-286/14), Czech Republic v Commission and Germany v Commission, establishes the central principles governing delegation and institutional balance.

For Spain, the fundamental rule is that European technical regulation can have direct and substantial effects on banks, but delegated authority is not unlimited. Essential policy choices must remain with the legislature, delegated powers must have a proper legal basis, the Commission must respect the boundaries of its mandate, and EU judicial review remains available.

EU delegated acts therefore represent a balance between democratic legislative control and the technical flexibility required for modern banking regulation.