Spain’s Frob shakes up management ahead of bailouts

The governing committee of Spain's Fund for Orderly Bank Restructuring (Frob), the organisation responsible for managing the restructuring and recapitalising Spanish banks, on July 6 agreed on a number of appointments aimed at strengthening its management team. The changes were made shortly before the Eurogroup revealed in a press conference today (July 9) that the first €30 billion ($36.7 billion) tranche of bailout funds would be handled by the Frob.

Antonio Carrascosa, currently the director general for economic policy at Spain's Ministry of Economic Affairs and Competitiveness, was selected as the new general manager at the Frob. "The role of the general manager is to manage the day-to-day business of the Frob, implementing the decisions adopted by the governing committee," a spokesperson for the Bank of Spain said.

Carrascosa replaces the Bank of Spain's Mariano Herrera, who returns to the central bank. The spokesperson declined to comment on the reasons for Herrera's departure, and said the bank had not yet decided what Herrera's role there would be.

Three new management roles have also been created at the Frob. Pedro Comín, formerly executive co-ordinator of the supervision department at the Bank of Spain, has been appointed executive director. Antonio Rosas, who has been at the Frob since 2009 after heading the Bank of Spain's control, budget and accounting department, has been appointed administration and control director. The final new position, director of legal advice, has not yet been filled. The spokesperson said the new roles were not on the governing committee, and therefore would not have voting powers.

This, combined with the movement of power from the central bank to a government minister at the general manager level, could mean a loss of independence for the body. Jordi Galí, director of the Centre of Economic Research in Barcelona, said: "I don't necessarily view it as a negative development... But the Frob will be less independent for sure." Galí said there was "no question" that there had been a shift of power from the Bank of Spain to the government.

The management reshuffle came just before major changes to the fund's operations. "The Frob is preparing for a new and crucial phase in the ongoing restructuring of the Spanish banking sector," the fund said in a statement announcing the appointments.

It is likely the statement was referring to the fact the Frob will be dealing with the bailout funds to be received by Spanish banks. This was confirmed at a press conference today, when Thomas Wieser, president of the Eurogroup working group, revealed that the Frob would handle the first tranche of bailout funds from the European Financial Stability Facility.

At the press conference, Jean-Claude Juncker, president of the Eurogroup, specified the details of initial funding. "We are aiming at reaching a formal agreement in the second half of July... allowing for a first disbursement of €30 billion by the end of the month," he said

The Frob was set up in 2009 to manage the restructuring process of Spanish banks. Its governing body comprises nine members, two appointed by the Ministry for the Economy and Competitiveness, four by the Bank of Spain, and three by the Credit Institutions Deposit Guarantee Fund, which was set up in 2011 to guarantee deposits and securities of Spanish credit institutions.