Government approves new legal regime to strengthen credit cooperatives

Moncloa Palace, Madrid

The Council of Ministers approved a Royal Decree-Law on urgent financial measures that seeks to reform the legal regime of credit cooperatives so as to strengthen these institutions.

The Minister for Economic Affairs, Industry and Competition, Luis de Guindos, explained that this applies to small institutions that undertake "important social work" of great importance for the financing of the agricultural, industrial and professional sectors, such as SMEs, independent contractors and entrepreneurs.

Luis de Guindos pointed out in his speech that, for some months now, the Ministry of Economic Affairs, together with different parliamentary groups - the Spanish Socialist Workers´ Party (PSOE), Ciudadanos and the Basque Nationalist Party - "have been aware of the need to update the regime for these credit cooperatives", which, with few exceptions, are under the control of the Bank of Spain and not the European Central Bank, as is the case of the large banks.

Following the approval of this new legislation, Institutional Protection Mechanisms (IPMs) can be created with the aim of contributing to strengthening and increasing the resistance capabilities of these institutions.

Pool Moncloa/J.M. CuadradoThe IPMs, which are conceived for mutual self-protection, may be of two types: strengthened or regulatory. Strengthened IPMs will pool 100% of the benefits and risks and have a lead institution that runs virtually all of the group's decisions. Regulatory IPMs do not have to pool 100% of the benefits and risks and are characterised by the constitution of a private guarantee fund, financed by the member institutions of the group, which will be used to tackle the potential own resource needs of the institutions that participate in the IPMs.

The Royal Decree establishes a series of incentives to set up these IPMs and certain measures to boost their good functioning.

Together with the reform of the legal regime for credit cooperatives, the Royal Decree-Law creates a new category of liabilities that all credit institutions can issue: ordinary non-preferential credit or subordinated senior debt. This is a new category of financial instruments for regulatory purposes, the aim of which is to facilitate compliance with the minimum requirements for own funds and liabilities admissible by these institutions.

More than 268 million euros for social policies

The Council of Ministers approved the distribution of 268.5 million euros to regional governments to boost social policies. The agreement, as the Government Spokesperson, Íñigo Méndez de Vigo, recalled, derives from the meeting held this same week between the Ministry of Health, Social Services and Equality and the regional governments.

The most important programme, explained Íñigo Méndez de Vigo, corresponds to aid charged to the 0.7% allocation of Personal Income Tax, known as the "Xsolidaria" programme, that taxpayers mark on their tax return and which are allocated to programmes aimed at the most needy.

Pool Moncloa/J.M. CuadradoOf the share allocated to the regional governments, 192.7 million euros have been distributed which, together with the 48.2 million euros allocated to the State and not included in this distribution, gives a total of 240.9 million euros, 6 million euros more than last year.

75.8 million euros have also been distributed for the provision of social services. The largest share - 48 million euros - corresponds to the Plan to Support Families and Infants. A total of 27.4 million euros are allocated to the Development Plan and 412,500 euros to the Gypsy Development Plan. A provision of 75,000 euros has also been approved for Andalusia as the organiser of the 2017 State Congress on Volunteer Work.

Economic and fiscal regime in the Canary Islands

The Council of Ministers approved the draft law modifying the economic and fiscal regime in the Canary Islands. The content of the project is the same at that approved at the Council of Ministers held on 31 March with the addition of four new points, "as a result of the agreement reached with New Canary Islands to approve the General State Budget, and which affects the remuneration for passenger transport", pointed out Íñigo Méndez de Vigo.

The text will include amendments relating to energy, water, waste management, customs control, transport, tourism, education, employment, regional incentives and agriculture. Remuneration for passenger transport will rise from 50% to 75% on journeys between islands in the archipelago; remuneration for goods transportation is established, the national contribution to POSEI (Programme of Options Specifically Relating to Remoteness and Insularity) is set and the price for water extracted from wells and galleries is offset.

Care for unaccompanied foreign minors

Pool Moncloa/J.M. CuadradoThe government approved a Royal Decree regulating the direct granting of a subsidy to the Autonomous Cities of Ceuta - 2.34 million euros - and Melilla - 4.1 million euros - to improve the care provided at reception centres for unaccompanied foreign minors.

According to the Government Spokesperson, the arrival of minors on national territory unlawfully and without the accompaniment of an adult has "very significantly increased over the last year, by 40% in Ceuta and by 17% in Melilla.

Given that this affects a "particularly vulnerable group, such as minors, our legislation makes them the target of special protection", specified Íñigo Méndez de Vigo.

Data protection

The Council of Ministers was presented with a report from the Minister for Justice, Rafael Catalá, on the draft constitutional bill on data protection.

The aim of this draft bill is to improve the regulation of this fundamental right to personal data protection and to adapt Spanish legislation to the provisions contained in the European Parliament Regulation on this matter before it definitively comes into force on 25 May 2018.

International agenda and budgets

The Government Spokesperson has announced that on Thursday June 29, President Rajoy will attend a meeting in Berlin prior to the G20 Summit. The following day he will attend the Polish-Spanish Summit in Warsaw, which means that next week's Council of Ministers has been brought forward to Thursday morning.

Pool Moncloa/J.M. CuadradoThe Cabinet will also hold an extraordinary meeting on Monday July 3 to approve the non-financial spending limit of the state budget for 2018. Íñigo Méndez de Vigo has explained that this is a necessary first step towards being in a position to present the general budget for the coming year, and that it "forms part of the obligations undertaken by our country" with the European Union. This expenditure ceiling must meet the deficit target agreed with the European Commission, which is 2.2% of GDP. Íñigo Méndez de Vigo commented that if this target is reached, Spain will exit from the excessive deficit procedure.

On another subject, the spokesperson reiterated the Government's condolences for the fires that have caused 64 deaths and razed over 40,000 hectares of forest in Portugal since June 16. He also stressed that Spain had led the European effort to fight the fires, with four aircraft, a hundred military personnel, and 19 vehicles.

Current affairs

Within the context of the pro-independence referendum in Catalonia, and in relation to the allusions made by the PSOE about a plurinational State, the minister and Government Spokesperson expressed the government's concern "because there is no clear vision as to what they seek for Spain" and they talk about a figure "that does not exist in the Constitution". At any event, he stated that the PSOE's position is firm and is close to that set in the consensus agreed in 1978.

Íñigo Méndez de Vigo reiterated the government's interest in dialogue and understanding with all parliamentary groups and announced that the President of the Government "is prepared to meet with the General Secretary of the PSOE whenever he wants".

Luis de Guindos, when asked about the PSOE's change of position on the ratification of the Comprehensive Economic and Trade Agreement between the European Union and Canada (CETA), stressed that this is an "impeccable" and "exemplary" agreement. It also constitutes "a form of template to also be applied to Latin American countries", he said as well. In light of the foregoing and taking into account that it has only be questioned by the populist parties, "I hope that the PSOE analyses it in detail, views it on a global basis and does not erect barriers to its ratification", he added.