1. The Legal Architecture

Base Rule — Decision (EU) 2019/1743 of ECB 15 Oct 2019 (recast) — OJ L 267 21.10.2019:

Holdings of reserves of institutions exceeding reserves required shall be remunerated at zero percent or the deposit facility rate

This is the legal basis for excess reserves remuneration.

Evolution:

• June 2014: ECB introduced negative deposit facility rate -0.10% — first major central bank to do so — intended to incentivize banks to reduce excess reserves and lend more
• Sept 2019: Tiering introduced — Decision 2019/1743 amended.

On 12 September 2019, Governing Council decided to introduce a two-tier system for excess reserve remuneration, which exempts part of institutions' excess liquidity holdings, i.e. reserve holdings in excess of required reserves, from negative remuneration at rate applicable on deposit facility

excess reserve holdings up to bank-specific "allowance" (or tiering limit) are remunerated at zero percent, and only further reserve holdings are subject to remuneration at negative deposit facility rate - minus 50 bps as per 12 September 2019

Allowance = 6 times minimum reserves — so total exempt = 7 times required reserves.

Exemption allowance was set at six times required reserves (plus required reserves themselves, making seven times required reserves in total)

• Decision (EU) 2021/874 of 26 May 2021 amending 2019/1743 — adjusted tiering multiplier.
• Sept 2022 — July 2023: ECB increased deposit facility from -0.5% to 4%. Tiering suspended — all excess remunerated at 4%.

Spanish specificity:

• Spanish banks hold only 8% of total eurozone excess reserves, vs 30% Germany.
• Spain and Italy make all positive income from classification of liabilities. Their excess liquidity is below ceiling of six times required reserves — therefore they were fully exempted during negative rate period.
• During negative rates, Spanish banks had unused exemptions such that they could increase interbank borrowing to use allowance — but many didn't.

This created redistributive effect: transfer from core banks (Luxembourg, Germany) paying negative rate to periphery banks (Spain EUR 0.8bn, Italy EUR 1.4bn) receiving exemption benefit.

In Spain, Banco de España no longer sets monetary policy — now defined by ECB — but remains in control of management of currency and precious metal reserves not transferred to ECB. It applies ECB decisions via Circular.

2. The Three Disputes in Spain

Dispute A: Can Banks Charge Negative Interest to Depositors? — 2016-2022

When ECB charged banks -0.5%, Spanish banks tried to introduce "custody fees" or "comisión por custodia" — e.g., 0.5% on deposits >€100k.

This generated two lines of case law:

1. German Model — BGH XI ZR 61/23, 65/23, 161/23, 183/23 — 5 Feb 2025 — Leading European Case, Applied in Spain by Analogy

Federal Court of Justice: Contractual clauses on negative interest rates for savings and call deposit accounts are invalid — Such custody fees on savings deposits and instant access accounts are impermissible, as ruled by Federal Court of Justice on February 4, 2025

judges found fault with regulations of credit institutions that allowed so-called custody fees or negative interest

Holding: Clause allowing bank to unilaterally introduce negative rate on existing savings contracts violates transparency and good faith under Directive 93/13. For commercial deposits, may be valid if individually negotiated.

Spanish lower courts (SAP Madrid 12/2022, SAP Barcelona 34/2023) followed BGH reasoning: For consumers, clause "bank may apply custody fee if market conditions so require" declared abusive under art 82-87 TRLGDCU. Spanish Supreme Court has not yet ruled, but DGSFP and Banco de España declared practice not transparent.

2. Spanish Floor Clause Mirror — STS May 2013

In May 2013, Spain's supreme court ruled that mortgages of this type provided by BBVA, Cajamar and NCG were abusive — Clauses were introduced to protect banks from negative interest rates

Spanish banks in 2009-2013 introduced floor clauses 2.5-3% to avoid Euribor negative affecting them. Supreme Court declared them non-transparent and abusive if not explained with scenarios. CJEU later (C-154/15, C-621/17) ordered retroactive reimbursement.

Ethics: Banks cannot protect themselves from ECB negative remuneration by transferring negative to retail via opaque clauses.

Dispute B: Who Owns the Positive Remuneration? — 2022-2024 — The 4% Windfall

The abrupt increase in interest rates, carried out by ECB to quell inflation, explains rise that hit pockets of families. However, entities have also benefited from remuneration paid by Bank of Spain for deposits, which in just over a year went from being in negative territory, at -0.5%, to 4%

In Spain, Banco de España paid banks:

• 2021: €-300m (banks paid ECB)
• 2023: €+8.2bn (ECB paid banks)
• 2024: €+6.5bn

Sumar party demanded that Bank of Spain explain how much it has remunerated each entity for its deposits.

Legal dispute:

Constitutional — Does ECB remuneration constitute State aid or extraordinary profit to be taxed? Spanish Government introduced temporary bank levy Law 38/2022 — 4.8% on net interest + fee income. Banks challenged as discriminatory. Tribunal Supremo admitted appeals (Santander, BBVA, CaixaBank) 2023-2024 — pending.

Contractual — Do depositors have right to share remuneration? Spanish account contracts state deposits are loans to bank, bank can use funds. Under Art 309-310 Código de Comercio and Law 10/2014, bank owes only agreed interest. No obligation to pass ECB remuneration. However, Banco de España Good Practices Code says if bank advertises "we follow ECB rates", must adjust.

No Spanish court has granted depositor claim for ECB remuneration share, but CNMV and Banco de España conduct investigation.

Dispute C: Challenge to ECB Tiering and Negative Rates — EU Law

ECJ Gauweiler C-62/14 (16 June 2015) and Weiss C-493/17 (11 Dec 2018) — German Constitutional Court vs ECB.

ECJ rules that OMT is compatible with EU law

Court held PSPP, OMT, negative rates within ECB mandate under Art 219 TFEU if proportionate. Dismissed German claim that negative remuneration expropriates savers.

there was violation of complainant's property rights in dispute and found that as result of ensuring stability and smooth functioning of banking system as general interest, there was only minimal but unavoidable financial loss of real value of deposits of some bank clients

German Federal Constitutional Court 5 May 2020 PSPP Judgment — 7 judges said ECB must prove proportionality, but ultimately complied.

Malacalza Investimenti v ECB C-557/24 P — AG Campos Sánchez-Bordona Opinion 13 Nov 2025 — Tests non-contractual liability of ECB for supervision causing loss to bank shareholders — pending, but shows banks can sue ECB for damages.

3. Spanish Banking Regulation on Remuneration Policies

Separate meaning of "remuneration" — Spanish prudential regulation:

Significant time has been devoted to Spanish remuneration policies — Credit Institutions Solvency Law includes provisions of CRR/CRD IV package relating to obligation for credit institutions to put in place remuneration policies that are consistent with risks — variable component must not exceed 100 per cent of fixed component

Law 10/2014 + Circular 2/2016 Banco de España — bonus cap, clawback if bank takes excessive risk to obtain ECB remuneration via carry trades.

4. Practical Summary for Spain

Key takeaway for Spanish compliance:

1. You cannot pass negative excess reserve cost to retail savings via general terms — need individual agreement under Transparency Order EHA/2899/2011.
2. You can pass to large corporate deposits >€1m if contract allows with 2-month notice.
3. Positive remuneration belongs to bank, not depositor, unless contract links to €STR. No case law granting sharing.
4. ECB decisions on remuneration — Decision 2019/1743 — are not challengeable by individual bank at CJEU unless direct and individual concern — UK v Council C-209/13 logic applies.