Fondo de Reestructuración Ordenada Bancaria

The Fondo de reestructuración ordenada bancaria (FROB), in English known as Fund for Orderly Bank Restructuring (FOBR), is a banking bailout and reconstruction program initiated by the Spanish government in June 2009. FROB, translated as the "Fund For Orderly Bank Restructuring", presides over the mergers and acquisitions of Spain's failing savings banks. FROB was funded with €99 billion, which it has used to incentivize the nation's large savings banks (or Cajas) to participate in large joint "virtual" mergers in an effort to stave off systematic financial instability.

In 2009, European leaders discussed whether European Union rescue program money can be paid directly to Spain’s bank rescue fund FROB to help Spain solve its banking crisis without seeking a full bailout, Bloomberg' Sueddeutsche Zeitung reported. In return for the cash, Spain would have to promise to solve its banking problems with measures that may include closing or merging financial institutions. Spain would not have to promise any major austerity or economic reforms in return for the help, the newspaper said.

On June 9, 2012, the Spanish economy minister Luis de Guindos announced that Spain would request a loan of up to 100 billion euro for FROB, which would be used to recapitalise Spanish banks. The money would be provided by the European Financial Stability Facility or the European Stability Mechanism.

By January 2017, the Spanish Court of Auditors (Tribunal de Cuentas) detected irregularities on the processes carried out by the FROB, especially when privatizing the entities after the bailout. The Tribunal de Cuentas claimed that, at the very least, the FROB did not adopt any criteria that ensured an efficient management of the public financing, as it is set out in Article 3 of the Law 9/2012, that establishes that public financing must always be minimized, and urgently requested a deeper investigation on the matter.

In 2009, a proposal was raised for Spain’s bank bailout fund to convert its 4.5 billion euros ($5.8 billion) of preferred shares in Bankia’s parent, Banco Financiero y de Ahorros, into voting shares, according to the Economy Ministry. That would give it a controlling stake of 45 percent in Bankia, the ministry said, adding the government will provide the capital that’s “strictly necessary” to clean up the lender.

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Wikipedia