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- 1
Spain: An attractive country for investment
- 2
Setting up a business in Spain
- 3
Tax System
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Investment aid and incentives in Spain
- 5
Labor and social security regulations
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Intellectual property law
- 7
Legal framework and tax implications of e-commerce in Spain
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Downloads
- AI
Company and Commercial Law
- AII
The Spanish financial system
- AIII
Accounting and audit issues
2Financial institutions
2.2 Credit institutions
The main credit institutions, i.e. banks, savings banks and credit cooperatives, play a particularly important role in the financial industry in Spain, because of the volume of their business and their presence in all segments of the economy. Credit institutions are authorized to engage in what is referred to as “universal banking”, i.e. not to confine themselves to traditional banking activities consisting merely of attracting funds and financing by granting loans and credit facilities, but also to provide para-banking, securities market, private banking and investment banking services.
However, with the aim of removing imbalances in the Spanish financial industry to permit its restructuring, significant changes have been made in the industry, mainly affecting groups of national banks and savings banks. Accordingly, the restructuring process is being carried out through concentrations of savings banks, banks and credit cooperatives, the conversion of savings banks into banks and recapitalization processes at certain institutions. The trend in the Spanish credit institutions sector is therefore towards a reduction in the number of institutions registered with the Bank of Spain.
As of December 31, 2022, there are officially registered at the Bank of Spain, the Official Credit Institute, 49 banks, 2 savings banks, 61 credit cooperatives, 25 representative offices in Spain of foreign credit institutions, 78 branches of non-Spanish EU credit institutions, 4 branches of non-EU credit institutions, 585 non-Spanish EU credit institutions operating in Spain without an establishment, 10 financial institutions which are subsidiaries of a non-Spanish EU credit institution, operating in Spain without an establishment, and 3 non-EU credit institutions operating in Spain without an establishment2.
Directive 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market (PSD2) was published in the Official Journal of the European Union on 23rd December 2015. This directive has been transposed into Spanish law through Royal Decree-Law 19/2018 of 23 November on payment services and other urgent measures in financial matters and Royal Decree 736/2019 of 20 December on the legal regime for payment services and payment institutions and amending Royal Decree 778/2012, of 4 May on the legal regime for electronic money institutions and Royal Decree 84/2015 of 13 February implementing Law 10/2014 of 26 June on the organisation, supervision and solvency of credit institutions.
2.2.1 Banks
Banks are corporations (Sociedades Anónimas) legally authorized to perform the functions reserved to credit institutions.
Their key features are summarized below:
Basic regulations |
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Corporate purpose |
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Minimum capital |
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Managing body |
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Shares |
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Formation of banks |
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2.2.2 Official Credit Institute (ICO)
It is a State-owned credit institution, attached to the Ministry of Economic Affairs and Digital Transformation through the Office of the Secretary of Economy and Business Support.
It acts as the State’s finance agency, providing financing pursuant to express instructions from the Government to those affected by serious economic crises or natural disasters. It also manages official export and development financing instruments.
2.2.3 Savings banks
Savings banks are credit institutions with the same freedoms as and full operational equality with the other members of the Spanish financial system. They have the legal form of private foundations and a community-welfare purpose and operate in the open market, although they reinvest a considerable portion of their earnings in community outreach projects3.
These long-standing institutions with deep roots in Spain have traditionally attracted a substantial portion of private savings, with their lending business characteristically focused on the private sector (through mortgage loans, etc.). They have also been very active in financing major public works and private-sector projects by subscribing and purchasing fixed-income securities.
Currently, as a result of the savings bank restructuring process, a number of savings banks have emerged which, while retaining their status as credit institutions, have stopped engaging directly in their traditional financial activity, as their financial business has been transferred to banks formed for that purpose and owned by the savings banks via the creation of Institutional Protection Schemes (IPSs).
Of a total of 45 Savings Banks (at the beginning of 2010), 43—which in terms of volume of total average assets represent 99.9% of the sector—have taken part or are currently taking part in some kind of consolidation process. As a result, the sector has gone from having a total of 45 entities with an average size of €29,440 million (December 2009) to being made up of 11 entities or groups of entities, with an average volume of assets of €89,550 million (March 2015).
Currently there are two savings banks that are Caja de Ahorros y Monte de Piedad de Ontinyent and Caixa D' Estalvis de Pollença4.
The Spanish savings banks are members of the Spanish Confederation of Savings Banks (CECA), a credit institution formed in 1928 to act as the national association and financial institution of the Spanish savings banks. The “special foundations”, the central institutions of the IPSs, the instrumental banks through which the savings banks engage in their financial activity and the institutions whose financial business derives from a savings bank all form part of the CECA. The CECA aims to strengthen the position of the savings banks, it acts as a forum for strategic reflection for all savings banks and other member entities, it advises them and it provides them with competitive products and services.
2.2.4 Credit cooperatives
Credit cooperatives are credit institutions that combine the corporate form of a cooperative and the activity and status of a fully operational credit institution.
Their uniqueness and importance lies in the fact that they function as a nonprofit organization, since their members combine their funds to make loans to each other, with any excess revenues being returned to the members in the form of dividends.
Their key features are described below:
Basic regulations |
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Corporate purpose | They may perform all types of lending and deposit-taking operations and provide all the services permitted to banks and savings banks, provided they give priority to the financial needs of their members. |
Minimum capital |
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Governing bodies |
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Contributions |
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Formation of credit cooperatives |
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Additional considerations regarding credit institutions:
- The regime governing significant holdings and changes of control at credit institutions.
Any individual or legal entity that, acting alone or in concert with others, intends to acquire, directly or indirectly, a significant holding5 in a Spanish credit institution or to increase, directly or indirectly, the holding in that institution so that either the percentage of voting rights or capital held is equal to or greater than 20, 30 or 50 percent, or that, by virtue of the acquisition could control the credit institution, must give prior notice to the Bank of Spain in order to secure a statement of non-opposition to the proposed acquisition, indicating the amount of the expected holding and including all the information required by law. Likewise, any individual or legal entity that has taken a decision to dispose, directly or indirectly, of a significant holding in a credit institution, must first notify the Bank of Spain of such circumstance.
It is the task of the Bank of Spain to assess proposed acquisitions of significant holdings and submit a decision proposal to the European Central Bank so that it can decide whether or not to oppose the acquisition.
Furthermore, any individuals or legal entities that, acting alone or in concert with others, have acquired, directly or indirectly, a holding in a credit institution, so that the percentage of voting rights or of capital that they hold is equal to or greater than 5%, must give immediate written notice of such circumstance to the Bank of Spain and the credit institution in question.
Similarly, any individual or legal entity that decides to cease to hold, directly or indirectly, a significant holding in a credit institution, must notify the Bank of Spain of such decision beforehand, indicating the shareholding percentage it intends to hold. It must also notify the Bank of Spain if it intends to reduce its significant shareholding in such a way that the percentage of voting rights or capital held by it falls to below 20, 30 or 50 percent, or results in the loss of control over the credit institution.
- Cross-border activities of credit institutions.
With regard to the cross-border activities of credit institutions, the following may be noted:
- A Spanish credit institution may operate abroad by opening a branch or under the freedom to provide services.
- Credit institutions authorized in another EU Member State may engage in Spain, either by opening a branch or under the freedom to provide services, in activities that benefit from mutual recognition within the European Community.
- Likewise, credit institutions not authorized in an EU Member State may provide services through a branch or under the freedom to provide services, but they will require prior authorization.
In all cases, the credit institutions must fulfill a number of statutory requirements.
Furthermore, credit institutions may operate in Spain through representative offices. However, representative offices may not perform credit operations, collect deposits, or engage in financial intermediation, nor may they provide any other kind of banking services. They are confined to engaging in merely information-related or commercial activities regarding banking, financial or economic matters. However, they may promote the channeling of third-party funds, through credit institutions operating in Spain, to their credit institutions in their countries of origin, and serve as a medium to provide services without a permanent establishment (that is, under the freedom to provide services).
2 https://www.bde.es/bde/es/secciones/servicios/Particulares_y_e/Registros_de_Ent/
3 As a result of the credit institution restructuring process, almost all the savings banks have agreed to separate their financial activities from their community welfare activities, so that today the community welfare activities are carried out by foundations and the financial activities by credit institutions (typically banks) owned by the savings banks.
4 Source: Register of Bank of Spain Entities
5 “Significant holding” means a holding in a Spanish credit institution that amounts, directly or indirectly, to at least 10 percent of the capital or voting rights of the institution. Where a holding makes it possible to exert a notable influence at the institution, it will also be considered a significant holding even if it does not amount to 10 percent.