Guaranteed deposits of securities

Guaranteed securities are marketable securities and financial instruments as defined in Article 2 of Spain’s Securities Market Act, delivered into the custody of a credit institution for deposit or registration or for the provision of an investment service. Guaranteed securities will, in all instances, include any securities ceded through repurchase agreements that are still recorded or registered as being held by the transferor.

The FGD shall cover the non-return of any securities or investments belonging to an investor affected by any of the circumstances described in Article 8(2) of Royal Decree 2606/1996 of 20 December. However, it will not cover any loss in value of the investment or any related credit risk.

The maximum guaranteed amount for investors who delivered securities or financial instruments into the custody of a member institution is independent from the guarantee provided for cash deposits, and may not exceed an amount of €100,000.

The amount will be calculated at the market value of the securities and instruments on the same day one the events provided for in Article 8(2) of Royal Decree 2606/1996 occurs, or on the previous working day if the event happens to fall on a public holiday, applying also the exchange rate for that same day if necessary. Guaranteed amounts in respect of securities will be repaid in their cash equivalent value.

If the securities or instruments are not listed on an official over-the-counter market in Spain or abroad, the amount guaranteed —should one of the events defined in Article 8 of Royal Decree 2606/1996 occur— will be calculated solely for that purpose in accordance with the following criteria:

1. Equity securities: underlying value calculated according to the issuer's latest audited balance sheet. If there is no audited balance sheet or a qualified opinion has been issued thereon with adjustments that could result in a lower underlying value than that stated in the financial statement, market value will be determined by an expert valuer.
2. Fixed-income securities: nominal value plus accrued interest when the interest rate is explicit, or redemption value discounted at the implied rate of the issuance in the case of zero-coupon securities or those issued at a discount.
3. Financial instruments: estimated market value calculated using generally accepted measurement procedures for the type of instrument in question.
4. The refundable value of securities or instruments issued by companies that are subject to insolvency proceedings will be determined by an expert valuer; the valuation may be delayed until the corresponding insolvency proceedings have concluded.

This guarantee will apply separately for each investor, whether they are a natural or legal person, and irrespective of the number and class of securities or financial instruments they hold at the same institution.

When the securities or financial instruments have more than one holder, the balance will be divided by the number of holders in accordance with the custodian agreement or, otherwise, into equal parts.

When the holders of a deposit comprising securities act as nominees or agents of third parties, provided that they were so before the circumstances described in Article 8 of Royal Decree 2606/1996 occurred, the coverage provided by the FGD will proportionally extend to the third-party beneficiaries of the securities held on deposit.

However, when the nominee or agent is one of the entities excluded from the coverage provided by the FGD under Article 4(4)(a) of Royal Decree 2606/1996, it will be considered that the securities held on deposit belong to that entity and they will not be covered by the FGD.

Should an institution have its authorisation to provide investment services revoked, the securities or financial instruments held by it will no longer be covered by the FGD once three months have elapsed from the revocation date. During this period, the institution must continue to make the contributions required by law.