• The new regulations will improve the protection of customers of this type of credit, which is characterized by automatic renewal and payment of a fixed monthly fee
  • The modification of the norm reinforces the information that the borrower receives from the entity and reduces the risk of excessive credit extension and increase

The Ministry of Economy and Business has published in a public hearing the proposal to modify Order 2899/2011 of transparency and protection of the client of banking services. The objective is to reinforce the protection of the users of the credits that are characterized by having an indefinite duration or automatic renewal, by the possibility of the client to determine the fixed fee to be paid periodically within a parameter, and that are associated with payment instruments , such as the so-called "revolving cards", increasing the transparency and information that entities must provide to these users and reducing the chances of over-indebtedness.

Specifically, the draft Order reinforces the information that the borrower receives from the entity, which will allow him to have a specific and clear knowledge of the content and effects of the service he is going to hire, as well as to know precisely the debt that he periodically maintains with the entity.

In this sense, new transparency obligations are included that include more detailed pre-contractual information, which reflects, among other things, a representative example of revolving credit with two quota options. Likewise, the entity must send quarterly information to the client in which the evolution and situation of specific aspects of the credit are specified, such as the amount of the loan, estimated date of completion of the payment of the credit if there are no changes in the contract and various scenarios depending on the variation of the monthly fee.

In any case, the borrower will be able to request information about his loan at any time, as well as the repayment schedule or the amounts paid and outstanding. Finally, the entity's obligation to inform the borrower of each extension of the credit limit not requested by the client, including the new installment and the accumulated debt, is established.

The modification of the norm also aims to reduce a possible excessive extension of credit and increase the final debt burden beyond the reasonable expectations of the person hiring this product. For this purpose, the order incorporates specific guidelines aimed at financial institutions in relation to the solvency assessment for this type of products, so that a more prudent estimate is made to ensure sufficient customer payment capacity and avoid over-indebtedness.

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  • Spain remains in 30th place and experiences a slight improvement to 77.9 points, approaching the reference level located at 100
  • In the last year Spain has registered an advance in the minority investors protection indicator

The World Bank has published the Doing Business report that analyzes the conditions for conducting business in 190 countries, granting a global final grade and a grade for each area analyzed, 100 being the reference value. Spain remains among the 30 best countries in the world to do business, with a score of 77.9 points.

In the analyzed period, which corresponds to the months between May 2, 2018 and May 1, 2019, Spain has improved the distance to the reference value, going from 77.68 to 77.9 points, the best result since 2008

Doing Business focuses on 10 regulatory areas that influence the business climate of a country. During the last year, Spain has improved the score and raised two positions in the minority investors protection indicator thanks to the reform of the Capital Companies Law.

Likewise, there is a slight improvement or maintenance of the score in relation to the reference value in the other indicators analyzed. However, there is a drop in ranking in the indicators of opening a company, obtaining credit and obtaining electricity due to the improvement in the score of other countries.

In the comparison with the best positioned European economies, Spain remains in the eleventh position.

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  • S&P raises its rating to A with a stable outlook, highlighting the higher growth in Spain compared to the euro zone, the strong downward trend of the debt / GDP ratio and the progress in fiscal consolidation
  • For its part, DBRS reaffirms Spain's rating in A and improves the outlook from stable to positive due to solid economic growth and sustained improvement in public finances.

September 20, 2019. The international rating agencies S&P and DBRS have improved, respectively, the rating and credit perspective of the Kingdom of Spain. S&P has raised the rating of our country, from A- to A with a stable outlook. DBRS, meanwhile, maintains Spain's rating in A and improves its outlook from stable to positive.

In the report in which it has published its upward revision, S&P highlights the greater growth of our economy against the euro zone, estimating that it could be maintained in the next three years. It considers that Spain is better positioned to face external challenges such as Brexit or the European economic slowdown. In this sense, the competitiveness gains, which are translating into current account surpluses in recent years, stand out.

S&P highlights the progress in fiscal consolidation, which will allow the deficit to be in 2019 at around 2%, the lowest since 2007. It also shows that more balanced economic growth and improvement of the fiscal position they are allowing a firmer reduction in the debt / GDP ratio.

S&P expects a further decline in the deficit and public debt compared to its previous report.

DBRS highlights strong economic growth

For its part, DBRS has reaffirmed Spain's rating in A, improving the outlook from stable to positive.

The rating of the Canadian agency is based on the strength and diversification of the Spanish economy, which has a competitive foreign sector and a sustained improvement in public finances. All this is allowing to maintain a solid growth, with a more balanced model. DBRS points out that the main risks for the Spanish economy are external, including Brexit, protectionism, the European slowdown or the rise in oil.

DBRS believes that the debt / GDP ratio will continue to decline in the coming years thanks to primary surpluses, low interest rates and economic growth. Highlights the work done by the Treasury to diversify the investment base and extend the average life of the portfolio, which together with monetary policy reduce the vulnerabilities of the Spanish public debt.

Finally, it underlines the strengthening of the financial sector, in terms of reduction of problematic assets, greater capitalization of entities and maintenance of profitability.

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  • The current tables have an observation period of more than 20 years and their updating is necessary taking into account the quantitative parameters of governance and transparency established in the framework of Solvency II
  • The approval of the new tables will be carried out through various regulatory instruments

The General Directorate of Insurance and Pension Funds, under the Ministry of Economy and Business, has begun the process of public consultation for the renewal of the regulatory framework of the biometric tables used by the insurance sector.

Current biometric tables have an observation period of more than 20 years. The approval of the new tables will take into account the quantitative, governance and transparency parameters established in the European Solvency II regulatory framework.

This renewal of the biometric tables will allow the insurance industry to provide a stable and reference environment for the coming years, with the objective of protecting the interests of policyholders and insured parties and guaranteeing the stability and solvency of the sector.

For this, new survival tables will be approved and the mortality tables will be updated in order to adapt them to the evolution recorded in recent years.

Finally, in order to avoid future mismatches in the tables used by the insurance sector and favor the quality of the insured portfolios data, a mechanism for monitoring the longevity insured will be established, in line with those existing in other European markets .

It is necessary to highlight the collaboration of the General Directorate of Insurance and Pension Funds, experts and main actors of the sector in the work of reviewing the tables, which has been made from an initial proposal of the sector from an actuarial study

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  • The acting Minister of Economy and Business, Nadia Calviño, today announced the reduction in the additional 10,000 million euros of the Treasury's net issuance for 2019. This reduction, together with the 5,000 million announced in April, will allow the net issuance this year be the smallest since 2007
  • For the first time since 2011 the gross issuance will fall below 200,000 million euros annually
  • The progressive reduction of the financing needs of the Treasury will contribute to the objective of reducing the weight of the public debt on GDP
  • Financing costs continue to decrease and record new historical lows. The interest rate of the issuing debt is 0.37% and the average cost of the live debt stock is 2.29%

The acting Minister of Economy and Business, Nadia Calviño, announced today that the Public Treasury will reduce the volume of net issuance planned for 2019 by an additional 10,000 million euros. This reduction, together with the one announced in April of 5,000 million, will place the net issuance in 20,000 million. This figure represents a reduction of 42.9% over that estimated at the beginning of the year and is the lowest net issue since 2007.

The planned gross emission is also reduced by the same amount, for the first time since 2011 below 200,000 million euros. Specifically, the planned gross issuance will amount to 194,525 million euros, 8.7% lower than in 2018.

This new reduction is made possible by the good evolution of the financing costs of the Treasury and by the confidence of investors in the Spanish economy, which has resulted in a sustained reduction of the risk premium since the beginning of the year.

Likewise, the more efficient management of the State treasury and the improvement of the finances of the Autonomous Communities, which has allowed them to regain access to the market, are other factors that have contributed to reducing the financing needs of the Treasury.

The lower financing needs allow an estimated saving of more than 2,000 million euros

The reduction of the emissions will allow an estimated saving in the payment of interest on the forecast at the beginning of the year of more than 2,000 million euros. In terms of GDP, the State interest burden will close 2019 below 2%, compared to 2.14% in 2018 and 0.9 tenths less than the maximum, 2.82%, which was reached in 2014.

The Government expects the public deficit to be reduced to 2% in 2019, registering for the first time since 2007 primary surplus. The reduction of the deficit, together with the lower financing costs will help to continue reducing the ratio of public debt to GDP.

Financing costs continue to decrease and record new historical lows

In 2019, the financing costs of the Treasury continue to be lowered, which record new historical lows, with an interest rate of the outstanding debt of 0.37% and the average cost of the stock of living debt that currently stands at 2.29 %.

These declines have occurred in an environment of high demand for Spanish public debt. This is shown by the average coverage ratio of Treasury auctions, which relates total demand to the amount issued, which has increased from 2.49 of 2018 to 2.86 so far this year.

Meanwhile, the average repayment terms remain in line with the main European issuers and stand at 7.55 years compared to 7.45 at the end of 2018.

New 50-year bond issue

In the morning of today the Treasury has made a new auction of Bonds and Obligations at 5, 10 and 50 years, as well as a bond linked to inflation due in 2030. In all issues interest rates have been obtained Historical lows

In the case of the 50-year obligation, which was last issued in November 2018, about 1,000 million euros have been issued at a marginal rate of 1.46%, compared to 3,036% to which the year was issued past. Ten years ago, 1,685 million were awarded at a marginal rate of 0.19%, compared to 0.31% of the last auction held in August, and 5 years ago a total of 856 million were issued, at a negative marginal rate of -0.32%, compared to -0.25% which was awarded in August.

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