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BankiaRegulations on incompatibilities

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Internal mechanisms implemented to comply with regulations on incompatibilities


Director selection policy

Bankia has approved a director selection policy that forms part of the company’s corporate governance system, which incorporates the procedures for ensuring that candidates to be appointed, re-elected or ratified as members of Bankia’s Board of Directors are not ineligible on any of the grounds for incompatibility, incapacity or prohibition established by the applicable regulations.

In addition to the conditions established by the applicable regulations, people that are affected by any of the following circumstances may not hold the position of director:

  • People that have been charged or accused of an alleged criminal action or that have been subject to disciplinary proceedings for serious or very serious offences by the supervisory authorities.
  • When their presence on Bankia’s Board of Directors could compromise the company’s interests for reputational reasons.
  • People that do not fulfil the suitability requirements established by the applicable regulations for members of boards of directors of credit institutions.
  • People that simultaneously hold more positions than is allowed under article 26 of Law 10/2014 of 26 June on the regulation, supervision and solvency of credit institutions.

Internal evaluation of the suitability of directors and senior managers

Bankia has a manual for evaluating the suitability of directors and senior managers, which establishes the following mechanisms:

a) Evaluation of directors’ suitability:

  • Appointment (prior to the appointment).
  • Re-election (prior to the re-election).
  • Continuous evaluation (annually and in specific situations that require it, when applicable).

b) Evaluation of the suitability of senior managers

  • Appointment (prior to the appointment).
  • Continuous evaluation (annually and in specific situations that require it, when applicable).

The following aspects are evaluated:

  • Commercial and professional reputation.
  • Appropriate knowledge and experience.
  • Ability to exercise good governance (directors).

All of this is notwithstanding the suitability assessment performed by the banking supervisor.

Restrictions on the maximum number of positions held in administrative bodies

According to article 8.3 of Bankia’s Board of Directors Regulations, “Members of the Board of Directors may not simultaneously hold more positions than the number established under banking and mercantile regulations applicable at any given time”. Circular 2/2016 of the Bank of Spain states that they may not simultaneously hold more positions than those indicated in any of the following combinations:

a) An executive position combined with two non-executive positions.

b) Four non-executive positions.

In such cases:

  • Multiple executive or non-executive positions held within a single group shall only count as one position.
  • Multiple executive or non-executive positions held in entities that form part of the same Institutional Protection Scheme shall only count as one position, provided that it complies with the conditions established in article 113.7 of EU Regulation 575/2013.
  • Multiple executive or non-executive positions held in commercial entities in which the institution has a significant shareholding shall only count as one position, as defined in article 4.1.(36) of EU Regulation 575/2013.

Procedure for supervising compliance with the regulations on incompatibilities

  1. To comply with the duty of disclosure established in article 34 of the Board of Directors’ Regulations, directors must make an initial declaration of their positions and activities upon being appointed to their position.
  2. Directors are required to immediately update this declaration should there be any changes to the situation they have declared or in the event of resignations or taking up new positions.
  3. The bank informs the Bank of Spain (Senior Officials Register) of any new appointments, departures and modifications that occur to positions as soon as it has been notified by the director or senior manager.
  4. In addition, during the year and when different corporate documents and reports are published (annual corporate governance report, financial statements, registration document and issue prospectus, etc.), all directors and senior managers are sent a series of questionnaires to disclose the positions and shareholdings that they hold (both in their own name and through related parties) in other companies. This information is used to issue the corresponding publications, keep the information about them and their related parties permanently up-to-date, and to identify any situation of incompatibility or ineligibility regarding their role.
  5. In the event that a member of the Board of Directors is affected by a situation of incompatibility with regards to performing his/her role, either because the person’s circumstances have changed or due to a change in the applicable regulations or for any other reason, this situation will be reported to Bankia’s Appointments Committee.

    The Appointments and Responsible Management Committee, within the framework of its general powers to propose and report on the appointment and dismissal of directors and senior managers (article 15.7 of the Board’s regulations), shall analyse the information provided and the individual situation of the director. It shall then issue the corresponding proposal to the Board of Directors based on its conclusions, which shall adopt the most appropriate decision in accordance with article 23 of the Board’s regulations and other applicable regulations.

Duty to prevent conflicts of interest

The Regulations of the Board of Directors state that directors must perform the role with the loyalty of a faithful representative, acting in good faith, in the company’s best interests, and must therefore take the necessary measures to avoid situations in which the director’s interests, acting on their own behalf or for third-parties, may come into conflict with the company’s interests and their duties to the company.

In particular, the duty to avoid conflict of interest situations requires directors to inform the Board of Directors of any situation of direct or indirect conflict that they, or people related to them, may encounter in relation to the company’s interests. They must therefore abstain from participating in the discussions and voting on resolutions or decisions in which the director or a related person has a conflict of interest.

Bankia has approved a conflict of interest policy that forms part of the company’s corporate governance system, which contains the procedures for preventing conflicts of interest with the company, its parent company, other Group companies and their customers, for directors as well as for shareholders and personnel in Group companies.

The mechanisms established by this conflict of interest policy to prevent these situations from arising include the creation of an Internal Evaluation Committee, which analyses and determines all related transactions, reporting to the bank’s Audit and Compliance Committee.

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