So that ailing institutions may urgently embark on restructuring and integration processes or so that control may promptly be taken of institutions that are non-viable, Parliament – once again with the agreement of the party in government and of the main opposition party – has provided the Banco de España with the necessary instruments, namely the Fund for the Orderly Restructuring of Banks (FROB), for these processes to proceed normally and without risks to the stability of the system. According to the law regulating it, the FROB may engage in two types of actions. The first involves pushing through and facilitating the restructuring of those banks that evidence pressing viability problems. In this type of situation, FROB regulations stipulate taking control of the institution and replacing its directors, by the FROB itself. The new directors shall draw up a report on the institution’s situation, submitting a restructuring plan for the approval of the Banco de España. This plan shall include merger measures, spin-offs or, where appropriate, the winding-up of the institution, adhering to competition law and seeking at all times to minimise the potential cost of the measures for the public coffers. So far, this exceptional decision to take control and replace directors has only been unavoidable in one instance, prior to the approval of the FROB. If at any point it were necessary to adopt this decision at any other institution, rest assured that the Banco de España, thanks to the creation of the FROB, will act with all due diligence.
The same can be said of the banking system, since if we undertake sufficiently extensive reform, we will be able to reasonably negotiate the current crisis; otherwise, banks would have to ultimately focus on the battle against bad debts and on the difficulties in obtaining external funding, and the authorities would have to focus on restructuring the banks that have deteriorated to the point of being clearly inviable. However, if we take advantage of this historic moment and carry out far-reaching labour reform, we will face a more positive scenario in which Spanish firms could promptly raise their competitiveness in the difficult (for these purposes) environment of a monetary union. Spain would enter a scenario in which increased productivity would provide a significant boost to its best firms. This would be particularly positive for SMEs, which find it most difficult to take advantage of the flexibility mechanisms offered by the current institutional framework, and they would benefit enormously from the implementation of a more flexible and simpler system. Meanwhile, budgetary consolidation could be achieved without swingeing cuts in expenditure and the banking system would be in a position to support this new growth phase. It would thus be a mistake to opt for small-scale labour reform, as if we could even afford to tackle this reform slowly, in various phases over various years. This would have been possible 5 or 10 or 15 years ago, when the last expansion phase started and the need for labour reform was not pressing.