05.07.2019  Ten years of the FROB and banking system transformations Opening address to the conference: “Tenth Anniversary of the creation of the FROB” Pablo Hernández de Cos Governor  Chairman of the FROB, Chair of the Single Resolution Board, Chair of the European Banking Authority, Vice-President of the European Central Bank, Chairman of the Financial Stability Institute, dignitaries, ladies and gentlemen, good morning. It is an honour and a pleasure for me to participate in the opening of this conference to commemorate the tenth anniversary of the creation of the FROB. I should like to take this opportunity to congratulate the chairman of the FROB, Jaime Ponce, and also his predecessors, Fernando Restoy and Javier Aríztegui, and their teams, for the work they have performed over the last ten years. The FROB embodies one of the main institutional changes made during the restructuring of the Spanish financial sector in the last decade, a process that has been fundamental in paving the way for the recovery of the Spanish economy in the aftermath of the crisis. Transformation of the Spanish banking industry in the last decade This period has witnessed one of the most far-reaching transformations in the Spanish financial system in recent decades and the FROB has played an important role in bringing about this transformation. The Spanish economy was engulfed by the international financial crisis at a time when significant imbalances had built up, which were particularly significant in our financial system.
In Europe, the Single Resolution Board (SRB) is responsible for preparing the resolution of significant European institutions. This preparation has already included drawing up resolution plans for all significant institutions, analysing their resolvability on an individual basis and establishing a minimum requirement for own funds and eligible liabilities (MREL) that make it possible to comply with the paradigm shift I have just referred to. The SRB has also put in place effective mechanisms for cooperation with the national resolution authorities that (like the FROB and the Banco de España) participate in the drawing up of resolution plans and in determining the MREL, and in implementing decisions taken by the SRB, as well as developing their own responsibilities for less significant institutions. I should like to underline the importance in these European resolution arrangements of the requirement that European credit institutions (including Spanish ones, naturally) have sufficient levels of MREL. The paradigm shift from a bail-out to a bail-in system, and the other tools permitted by European legislation, require that banks have a sufficient level of MREL so that, if the case arises and there is a public interest involved, the institution can be resolved, while minimising the burden on the taxpayer and ensuring the continuity of critical functions and a minimum impact on the rest of the financial system. For some institutions, this requirement represents a considerable challenge for the coming years.