Banking Law and Regulatory Approval Financing in Spain

Jurisdiction: Spain

1. Introduction

Regulatory approval financing in Spain describes financing transactions whose completion, availability, acquisition, investment, or repayment structure depends on obtaining approval from a financial or other public regulator.

The concept appears particularly in:

• bank acquisitions;
• qualifying shareholdings in credit institutions;
• mergers and restructurings;
• acquisitions of investment firms;
• regulated fintech businesses;
• payment and electronic-money institutions;
• insurance-related transactions;
• major infrastructure or regulated-sector projects; and
• financing arrangements involving foreign investment controls.

Spain does not have a single statute called a Regulatory Approval Financing Act. Instead, the subject lies at the intersection of banking regulation, corporate law, contract law, EU prudential regulation, competition law and administrative law.

The central principle is:

Financing can be contractually committed before regulatory approval, but the transaction cannot lawfully bypass an approval that legislation requires before completion or control is acquired.

2. Main Spanish and EU Framework

For banks, an important Spanish statute is Law 10/2014 on the regulation, supervision and solvency of credit institutions, supplemented by Royal Decree 84/2015.

At EU level, the prudential framework includes the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD) framework.

Depending on the transaction, other relevant legislation may include:

• Law 6/2023 on Securities Markets and Investment Services;
• EU Single Supervisory Mechanism rules;
• Spanish competition legislation and the EU Merger Regulation;
• foreign direct-investment screening rules;
• payment-services legislation;
• MiCA for relevant crypto-asset businesses; and
• Spanish corporate and contract law.

Consequently, identifying the regulated entity and transaction is the first step.

3. Acquisition of a Spanish Bank

A simple example illustrates the issue.

Assume:

Investor A wants to acquire 30% of Spanish Bank B.

Investor A obtains €500 million of acquisition financing.

The loan may be legally documented and committed, but acquiring a qualifying holding in a regulated credit institution is subject to the relevant prudential assessment procedure.

The financing documents therefore need to distinguish:

financing commitment

from

regulatory permission to complete the acquisition.

Money being available does not itself authorize the acquisition.

4. Qualifying Holdings

EU banking regulation establishes controls over acquisitions and increases of qualifying holdings in credit institutions.

The supervisory framework examines proposed acquisitions reaching specified thresholds and situations involving control.

The assessment can consider matters including:

• reputation of the proposed acquirer;
• reputation and experience of proposed management;
• financial soundness of the acquirer;
• continuing prudential compliance by the target institution; and
• money-laundering or terrorist-financing concerns.

Financing therefore matters because regulators may examine whether the acquirer's financial structure is sustainable.

5. Financing and Financial Soundness

Suppose an investor proposes to purchase a bank almost entirely with debt.

The acquisition price is €1 billion:

• Investor equity: €100 million
• Acquisition debt: €900 million.

The regulator may need to understand how that leverage affects the acquirer's financial soundness and the future stability of the regulated institution.

The question is not simply:

“Can the investor pay the purchase price today?”

It can also be:

“Will this ownership structure threaten prudent and sound management of the bank after completion?”

Thus, the financing structure itself can become relevant to regulatory approval.

6. Conditions Precedent

Financing agreements commonly deal with regulatory approvals through conditions precedent.

For example:

“The acquisition facility may not be drawn for completion unless all required regulatory approvals have been obtained.”

This protects the lender from funding a transaction that cannot lawfully close.

Conditions may address:

• ECB approval;
• Banco de España procedures;
• CNMV authorization;
• competition clearance;
• foreign-investment approval; or
• other sector-specific permissions.

The exact conditions depend on the transaction.

7. Long-Stop Dates

Regulatory approval may take time.

Financing documents therefore commonly include a long-stop date.

Example:

Regulatory approvals must be obtained by 30 June 2027.

If approval has not been obtained by that date, contractual consequences may include termination of commitments or another agreed result.

This allocates the risk that regulators do not decide within the commercial timetable anticipated by the parties.

8. “Certain Funds” Financing

Large acquisitions may require high financing certainty.

A bidder may need confidence that financing will remain available when the acquisition becomes unconditional.

However, regulatory conditions create a tension:

Seller wants certainty of payment.

Buyer needs regulatory approval.

Lender wants protection against unlawful completion.

Transaction documentation therefore carefully separates conditions relating to regulatory approval from financing conditions controlled by the borrower.

9. Banco de España and ECB

Spain participates in the Single Supervisory Mechanism (SSM).

For acquisitions involving qualifying holdings in credit institutions, both the Banco de España and European Central Bank can have important roles within the applicable SSM process.

The ECB has decision-making powers concerning qualifying holdings in credit institutions under the SSM framework.

A Spanish acquisition therefore cannot be analysed solely through domestic company law.

European banking supervision forms part of the transaction architecture.

10. Acquisition Finance and Regulatory Capital

Acquisition financing can also interact with prudential capital rules.

A regulated bank financing an acquisition must consider its own:

• credit risk;
• large exposures;
• concentration risk;
• connected-client exposure;
• collateral;
• capital consumption; and
• governance requirements.

If the borrower is itself a regulated financial institution, additional capital and prudential issues may arise.

Therefore:

Transaction approval and lender prudential compliance are separate regulatory questions.

11. Financing Investment Firms

Regulatory approval financing also occurs outside traditional banks.

Suppose Investor X acquires a substantial interest in a Spanish investment firm.

The transaction may trigger requirements under the securities and investment-services framework.

The CNMV may therefore become important.

The lender financing the transaction needs to identify whether completion requires regulatory clearance before ownership can change.

12. Payment Institutions and Electronic-Money Institutions

Payment institutions and electronic-money institutions are also regulated businesses.

Acquisition or control transactions involving such entities can require regulatory analysis.

For example:

Private equity fund → acquisition facility → Spanish payment institution.

The fund cannot assume that because the target is “fintech” rather than a conventional bank, regulatory approval is irrelevant.

The legal classification of the target determines the approval regime.

13. Crypto-Asset Businesses

MiCA adds another important area.

Qualifying crypto-asset service providers operate under an EU authorization and supervisory framework.

Acquisitions involving regulated crypto businesses may therefore require consideration of MiCA's provisions concerning qualifying holdings and supervisory assessment.

A future acquisition structure might be:

Bank → financing → private equity buyer → Spanish crypto-asset service provider.

Both financing law and crypto regulatory requirements must then be considered.

14. Competition Approval

Bank acquisitions can also require competition review.

This is legally distinct from prudential banking approval.

A transaction might therefore require:

prudential approval + merger-control clearance + foreign-investment clearance.

Each serves a different purpose.

Prudential supervision focuses on financial stability and sound management.

Competition authorities focus on competitive effects.

Foreign-investment screening addresses specified security and public-order considerations.

Approval under one regime does not automatically replace approval under another.

15. Foreign Direct Investment Screening

Spain maintains a foreign-investment screening regime for specified investments.

Depending upon the investor, target and sector, acquisition of a Spanish financial or strategically relevant business may require authorization.

This can directly affect financing.

A lender may require evidence that any necessary foreign-investment authorization has been obtained before permitting acquisition funds to be used.

16. Regulatory Approval as a Contractual Condition

Spanish contract law generally permits parties to make contractual performance dependent upon conditions, subject to mandatory law.

Regulatory approval can therefore operate as a condition to closing or funding.

Suppose:

Loan signed January
Regulatory approval expected April
Acquisition completion May.

The loan exists in January, but the acquisition tranche cannot be drawn until the specified regulatory condition has been satisfied.

This is common risk allocation rather than an attempt to transfer regulatory authority to the parties.

17. What Happens if Approval Is Refused?

Suppose the regulator refuses the acquisition.

Several consequences may follow.

The buyer may be unable to acquire the regulated business.

The acquisition agreement may terminate according to its terms.

The acquisition facility may never become drawable.

Commitment fees or transaction costs may nevertheless remain payable depending on the financing documents.

The parties may also have agreed provisions allocating regulatory risk.

The regulator's refusal does not automatically make every associated private contract void. The effect on each contract depends on its terms and applicable law.

18. Regulatory Covenants

Financing agreements can require borrowers to:

• submit applications promptly;
• provide information to regulators;
• cooperate with the approval process;
• avoid actions prejudicing approval;
• notify lenders of material regulatory communications; and
• maintain required authorizations.

However, contractual provisions cannot force a regulator to approve a transaction.

Nor should financing terms require a party to mislead or withhold legally required information from the authorities.

19. Representations and Warranties

A borrower may represent that:

• necessary regulatory filings have been identified;
• information supplied to lenders is accurate;
• it possesses required existing licences;
• no known regulatory prohibition prevents the transaction, subject to disclosed approvals.

If those representations are materially false, contractual consequences may follow.

This is separate from the regulator's own enforcement powers.

20. Regulatory Approval and Illegality

A particularly serious problem arises if parties complete a transaction despite a statutory prohibition on doing so before approval.

A financing contract cannot make an unlawful acquisition lawful.

Spanish contract law and EU regulatory requirements must therefore be considered together.

The principle is:

Private agreement cannot override mandatory public regulation.

21. Relevant Case Law

There is no single line of cases called “regulatory approval financing.” Instead, relevant jurisprudence comes from bank acquisitions, supervisory decisions, licensing, qualifying holdings and EU administrative-law principles.

1. CJEU — Berlusconi and Fininvest, Case C-219/17, 19 December 2018

This is one of the most important cases for bank-ownership approvals under the SSM.

The dispute concerned the acquisition of a qualifying holding in an Italian bank and the respective roles of national authorities and the ECB.

The CJEU held, in substance, that where EU law gives the ECB final decision-making power within the SSM procedure, judicial review of the final EU decision belongs to the EU Courts.

Spanish relevance: The same SSM architecture applies to Spain. A Spanish bank acquisition involving a qualifying holding is not merely a domestic administrative matter.

2. CJEU — Landeskreditbank Baden-Württemberg v ECB, Case C-450/17 P, 8 May 2019

The case concerned the structure and scope of ECB supervision within the SSM.

The Court confirmed the central role of the ECB within the integrated supervisory framework.

Financing relevance: Acquisition financing involving Spanish banks must be structured with the European supervisory architecture in mind rather than treating Banco de España and the ECB as unrelated regulators.

3. CJEU — Trasta Komercbanka and Others v ECB, Joined Cases C-663/17 P, C-665/17 P and C-669/17 P, 5 November 2019

The litigation arose from the withdrawal of a bank's authorization and raised questions concerning judicial protection and standing in ECB supervisory matters.

Relevance: Regulatory authorization has direct consequences for the economic value and legal capacity of banking businesses. Financing secured against or dependent upon a regulated institution must therefore consider authorization risk.

4. CJEU — ECB v Crédit Lyonnais, Case C-389/21 P, 13 July 2023

The dispute concerned an ECB prudential decision relating to the leverage-ratio framework.

The judgment is important for understanding judicial control over ECB prudential decisions and the exercise of supervisory discretion.

Financing relevance: Prudential decisions affecting regulated institutions are subject to legal standards and judicial review, but commercial financing documents cannot substitute their own assessment for the competent supervisor's statutory judgment.

5. CJEU — Kotnik and Others, Case C-526/14, 19 July 2016

The case concerned state aid and burden-sharing measures in the banking sector.

Although not an acquisition-financing case, it demonstrates how banking transactions can be constrained by mandatory EU regulatory requirements even where private financial interests are substantially affected.

Relevance: Financing arrangements involving regulated banks operate within a wider public-law framework concerned with financial stability and EU regulatory objectives.

6. CJEU — Dowling and Others, Case C-41/15, 8 November 2016

This case arose from measures connected with the recapitalization of an Irish bank during the financial crisis.

The Court considered the relationship between company-law protections and measures required under EU financial-stability arrangements.

Relevance: Ordinary shareholder and contractual arrangements may operate differently when mandatory banking-stability measures intervene.

This is particularly relevant where acquisition or recapitalization financing depends upon regulatory action.

7. CJEU — Ledra Advertising v Commission and ECB, Joined Cases C-8/15 P to C-10/15 P, 20 September 2016

The case arose from financial-sector restructuring in Cyprus.

The Court considered, among other matters, the responsibilities of EU institutions in connection with financial-assistance arrangements.

Relevance: Banking transactions do not exist solely within private contract law. Public-law and financial-stability requirements can significantly alter the economic position of investors and creditors.

8. CJEU — Andriciuc and Others v Banca Românească, Case C-186/16, 20 September 2017

Although primarily a consumer-credit and unfair-terms case rather than a regulatory-approval dispute, Andriciuc emphasizes transparency concerning significant financial consequences in banking contracts.

Financing relevance: Where regulatory events materially affect a financing arrangement, clear drafting of conditions, risks and economic consequences is important, particularly where protected customers are involved.

22. The Berlusconi/Fininvest Principle

For Spain, Berlusconi and Fininvest deserves particular attention.

A qualifying-holding procedure within the SSM can involve:

Investor → national competent authority → assessment/proposal → ECB → final supervisory decision.

The procedure therefore combines national administrative participation with EU decision-making.

This has consequences for financing documentation.

Parties must identify:

• which authority receives the filing;
• which authority evaluates particular matters;
• who ultimately decides;
• when approval becomes effective; and
• which court has jurisdiction to review the relevant final act.

Incorrectly identifying the approval process can delay the entire acquisition.

23. Regulatory Approval and Bank Guarantees

Sometimes acquisition financing includes guarantees.

Suppose:

Acquisition SPV = borrower

Parent company = guarantor

Bank shares = acquisition asset

The guarantee can support repayment of financing, but it does not guarantee regulatory approval.

Lenders therefore need to distinguish:

credit support

from

regulatory certainty.

No private guarantee can compel the ECB or another competent authority to approve an acquisition.

24. Security Over Shares

Acquisition lenders may seek security over shares.

Where those shares represent ownership in a regulated institution, enforcement may itself raise regulatory issues.

A lender cannot necessarily enforce security in a way that causes an unauthorized person to acquire a qualifying holding.

Thus:

Security enforcement can itself become a regulated ownership event.

This is a particularly important feature of financing regulated businesses.

25. Refinancing After Approval

Regulatory approval risk does not necessarily disappear at completion.

A transaction may later be refinanced.

If refinancing changes:

• ownership;
• control;
• leverage;
• governance;
• shareholder arrangements; or
• the identity of persons exercising significant influence,

additional regulatory analysis may be required.

Banks should therefore examine material post-closing financing changes rather than assuming the original approval covers every future restructuring.

26. Insolvency of the Acquisition Vehicle

Suppose the SPV used to acquire a Spanish bank becomes insolvent.

The lender wants to enforce share security.

Ordinary insolvency and security law become relevant, but so does banking regulation.

If enforcement would result in the lender or purchaser crossing a qualifying-holding threshold, regulatory approval requirements may again arise.

The existence of valid security therefore does not automatically create an unrestricted right to become owner of a regulated bank.

27. Example

Assume European Investment Group A wants to acquire 40% of Banco Hispania, a hypothetical Spanish credit institution, for €800 million.

The structure is:

Investor equity: €300 million
Acquisition facility: €500 million
Borrower: Acquisition SPV
Security: SPV assets and permitted share security
Target: Spanish regulated bank

The legal process could involve:

Step 1: Financing documentation is negotiated.

Step 2: The qualifying-holding application is submitted through the applicable supervisory process.

Step 3: Competition and foreign-investment requirements are separately analysed.

Step 4: Lenders remain committed subject to agreed conditions.

Step 5: Required regulatory approvals are obtained.

Step 6: Conditions precedent are confirmed.

Step 7: The facility is drawn.

Step 8: Acquisition completes.

If regulatory approval is refused at Step 5, the acquisition should not simply proceed because the €500 million facility is available.

28. Main Legal Risks

Regulatory approval financing creates several important risks.

Approval risk: The regulator refuses the transaction.

Timing risk: Approval takes longer than the financing commitment period.

Conditionality risk: Financing conditions and acquisition conditions do not match.

Prudential risk: The proposed financing structure undermines the financial soundness of the acquirer or target.

Enforcement risk: Security cannot be enforced without another regulatory approval.

Competition risk: Prudential approval is obtained but merger clearance is not.

FDI risk: Foreign-investment authorization is required.

Information risk: Regulatory filings contain incomplete or inconsistent information.

Change-of-control risk: Refinancing unexpectedly creates a new regulated ownership event.

29. Practical Documentation Principles

A well-structured Spanish regulatory-approval financing transaction normally needs alignment between:

Acquisition agreement

Financing agreement

Regulatory applications

Security documentation

Corporate approvals

Closing mechanics

The documents should answer four essential questions:

What approvals are required?

Who must obtain them?

By what date?

What happens if they are refused or delayed?

Without that alignment, the buyer could become legally obliged to complete an acquisition while being unable to draw the financing—or have financing available for a transaction it cannot legally complete.

Conclusion

Regulatory approval financing in Spain is the financing of transactions whose lawful completion depends upon regulatory authorization or clearance. It is particularly important for acquisitions of banks, investment firms, payment institutions and other regulated financial businesses.

The principal banking framework includes Law 10/2014, Royal Decree 84/2015, the EU CRR/CRD framework and the Single Supervisory Mechanism, supplemented where relevant by securities, competition, foreign-investment, payment and crypto-asset regulation.

The most important judicial authority for bank-ownership approvals is Berlusconi and Fininvest (C-219/17), while Landeskreditbank (C-450/17 P), Trasta Komercbanka (Joined Cases C-663/17 P, C-665/17 P and C-669/17 P), ECB v Crédit Lyonnais (C-389/21 P), Kotnik (C-526/14), Dowling (C-41/15), Ledra Advertising (Joined Cases C-8/15 P to C-10/15 P), and Andriciuc (C-186/16) provide additional principles concerning supervision, financial stability and banking regulation.

The core rule is:

Financing certainty does not equal regulatory certainty.

A lender can commit hundreds of millions of euros to an acquisition, but where Spanish or EU law requires supervisory approval, private financing documentation cannot authorize completion before the competent regulator permits the transaction.