European Banking Authority (EBA) Guidelines - Influence on Spanish Banks

EBA is created under Regulation (EU) No 1093/2010. Under Article 16(3) of that Regulation, EBA Guidelines are soft-law but have comply or explain effect: competent authorities and financial institutions must make every effort to comply.

For Spain, the competent authorities are:

• Banco de España - prudential supervisor of less significant institutions, specialised lending institutions, payment institutions - it adopts Guidelines as its own, e.g. Executive Commission adopted structural FX Guidelines on 23rd Oct 2020 with immediate application
• FROB - executive resolution authority

Banco de España systematically notifies compliance to EBA. Compliance tables show:

• SREP Guidelines EBA/GL/2014/13 - Spain Yes
• Encumbered assets disclosure - Spain Yes
• Resolvability EBA/GL/2014/11 - Spain compliance noted
• Remuneration, creditworthiness assessment, etc.

If Banco de España does not intend to comply, it must explain to EBA, but practice is almost full compliance.

How EBA Guidelines Shape Spanish Banks - 5 Channels

1. Prudential Capital & Stress Testing:
2011-2012 EBA required 9% Core Tier 1. Spanish banks were required to raise EUR17bn net - EUR26bn gross minus convertible bonds. Since 2014, EBA conducts 5 rounds of stress tests, which feeds into Pillar 2 Guidance (P2G).

2. Loan Origination and Monitoring - EBA/GL/2020/06:
Guidelines addressed to competent authorities and financial institutions, objective is to improve practices. Entered into force 30 June 2021. Banco de España made them binding for Spanish banks - impacts creditworthiness assessment, pricing, collateral valuation. This directly influences mortgage market.

3. Governance and Outsourcing:

• EBA Guidelines on Internal Governance, Suitability of management body - Spain was paradigmatic case after savings banks crisis
• EBA Guidelines on outsourcing arrangements 25 Feb 2019
• EBA Guidelines on ICT and security risk management 29 Nov 2019

4. AML/CFT Compliance Officer:
EBA published Guidelines on roles and responsibilities of Compliance Officer for AML/CFT. Spanish banks must implement 4-eye principle.

5. Consumer Protection:
EBA has specific mandate to protect consumers and lays down rules that ensure fair and transparent practices. This intersects with Spanish mortgage litigation.

Spanish Case Laws Where EBA Framework Interacts

Spanish courts do not cite EBA Guidelines as directly enforceable, but use them to interpret transparency and good practice under Directive 93/13/EEC and Banco de España Circulars.

1. Floor Clauses - Cláusulas suelo - CJEU Joined Cases C-154/15, C-307/15, C-308/15 - Gutiérrez Naranjo v Banco Popular Español - 21 Dec 2016

• Spanish Supreme Court 9 May 2013 held floor clauses unfair for lack of transparency but limited retroactive effects.
• CJEU held: Spanish case-law placing temporal limitation on effects of invalidity is incompatible with EU law. Consumers entitled to full refund. Press release 144/16.
• EBA Influence: After judgment, Banco de España and EBA Consumer Trends Report forced banks to re-assess product oversight. EBA creditworthiness guidelines EBA/GL/2015/11 now require clear disclosure of main features. Cost to Spanish banks estimated €3,000-5,000m.

2. IRPH Index - C-125/18 Gómez del Moral Guasch v Bankia SA - 3 March 2020

• IRPH = Índice de Referencia de Préstamos Hipotecarios. Spanish Supreme Court 669/2017 declared IRPH legal and transparent.
• CJEU Grand Chamber 3 March 2020: Clause setting benchmark based on savings banks IRPH is included in scope of unfair terms Directive. Bank of Spain Circular publishing formula in BOE is not enough - judge must assess transparency case-by-case.
• EBA loan origination guidelines require banks to explain how reference index is calculated and historical volatility. Banco de España Notice 5/1994 warned using IRPH simply as published meant setting AER above market - failure to warn became evidence of lack of transparency.

3. Collective Transparency - C-450/22 Caixabank and Others v Adicae - 4 July 2024

• CJEU on transparency in collective actions for mortgage floor clauses. Clarifies concept of average consumer. Reinforces EBA Product Oversight and Governance Guidelines - banks must test understandability with average consumer.

4. Kutxabank - C-300/23 (Pending)

• Reference on IRPH, whether Bank of Spain's own warning in 1994 creates transparency obligation. Shows continuing clash between Banco de España's regulatory circulars and EBA transparency expectations.

5. Resolution - Banco Popular 2017

• EBA Guidelines on measures to reduce impediments to resolvability EBA/GL/2014/11 applied by Banco de España and FROB. Structure with two resolution authorities - Banco de España preventive, FROB executive.

Practical Effect in Spain

For Spanish banks today:

• All new mortgage contracts must pass EBA GL 2020/06 loan origination checklist, otherwise Tribunal Supremo presumes lack of transparency under Art 4(2) Dir 93/13.
• SREP letters from ECB/Banco de España reference EBA GL 2014/13 directly for capital add-ons.
• Non-compliance with EBA Guidelines is used by Spanish claimant lawyers as evidence of breach of buenas prácticas bancarias before Banco de España Complaints Service.