2022 FROB Annual Report

FROB today publishes its 2022 annual report, setting out key milestones reached over the course of the year.

Madrid, 07/07/2023.

The executive resolution authority – FROB – has published its 2022 Annual Report today, with the key milestones in its activity over the year, which was marked, at the level of the Single Resolution Mechanism (SRM) by close monitoring of the consequences of the geopolitical and macroeconomic context on European entities.

In this financial year, FROB has continued to work on further developing its resolution preparation, with the aim of ensuring an appropriate response in the event of a crisis, and exercising its rights in its investees, in which there have been major developments, with public control having been taken in April, after obtaining the majority of the capital of Sareb.

Paula Conthe, FROB’s Chair, remarked in her institutional message that “this environment that institutions work in nowadays is also shifting significantly for the authorities. Despite the major regulatory developments that have been implemented since the previous crisis, recent events show we must continue to develop and adapt to new realities. We must not forget what recent experience has taught us and I feel I must highlight that we need to continue developing to complete the Banking Union and reinforce our crisis management framework”.

The details of the main activities carried out by FROB in 2022 are as follows:

1. Work within the European Resolution Framework.

FROB has continued its regular involvement in all resolution planning tasks commissioned to it by Law, in close cooperation with the Single Resolution Board (SRB) and the Spanish preventive resolution authorities (the Bank of Spain and the CNMV). It has also continued to work hard on improving its preparation for potential resolution cases, mainly through the introduction, for the first time, of a simulation of the resolution of a fictitious less significant institution (LSI) with the aim of testing and improving the speed and adaptation of internal processes to tackle a situation of non-viability of a real institution, along with participation in a simulation at the level of the Single Resolution Board. FROB’s active participation in the different international forums specialised in resolution matters is also worthy of mention. Work has focused this year on closely monitoring the consequences of the inflationary environment and interest rate hikes on institutions, along with issue conditions in a context in which they must make progress in compliance with the Minimum Requirement of Eligible Liabilities (MREL).
As normal, contributions were also collected in 2022 for the resolution funds (funding tools which the resolution authorities may use to implement resolution measures) totalling EUR 1,14 million (EUR 1,13 million for the European Single Resolution Fund and EUR 2.9 million for the National Resolution Fund).

2. Work arising from the bank restructuring process.

As usual, FROB’s work in this area focused on monitoring its stakes in BFA and Sareb and on managing the guarantees granted in previous divestment processes, along with the litigation stemming therefrom.
In particular, this year has been marked – following the introductions contained in Royal Decree-Law 1/2022, which eliminated the limits on the State’s stake in the shareholding of Sareb – by the formalisation by FROB of the purchase of the percentage of shares required to attain 50.14% of this company’s share capital and the changes stemming from it attaining this public control at an organisational and strategic level.
Furthermore, in 2022, the Banco de Valencia Asset Protection Scheme (APS) also matured, which closed at a total cost for FROB of EUR 206 million, a figure significantly lower than the EUR 600 million initially estimated at the time of the execution of the sale of the institution. For FROB’s Chair, Paula Conthe, “this outcome shows the usefulness of these tools as crisis management support measures, which benefitted from the excellent management and collaboration of the purchaser – CaixaBank”.

3. Other activities.

Finally, other noteworthy actions carried out over the course of 2022 include the continued implementation of different actions framed within FROB’s Social Responsibility Policy, the revision of the first level of FROB´s internal regulations in force, with a view to updating and simplifying them, and collaboration with the Court of Auditors in the work it carries out within the framework of its audit activity[1].

FROB’s annual reports are available on its website

[1] “Audit report on the actions by FROB and the Bank of Spain in the merger between CaixaBank and Bankia and on the situation of the bank re-structuring process at 31 December 2021”, approved by the plenary session of the Court of Auditors at its session on 28 March 2023.