Spanish Commercial Banks

Deregulation, financial and economic globalization? and integration to the European financial markets are the three outcomes that follow after the significant changes which the Spanish banking industry has undergone during the last 20 years. The growing world rivalry between banks drove the Spanish banking institutions to a new development aiming consolidation via merger and takeover. The concentration of the Spanish banking industry increased while the share of top banking groups in the total assets of the system has leaped from 50% to 70% in 5 years.

The process lead to alterations in the structure of the savings banks and the credit units. The number of institutions was reduced significantly; at the same time, the concentration process couldn’t stop the competitive spirit of the banking market and even contributed to an progressive narrowing of the spread between lending and deposit operations. The increased competition and the potential extension of the banks’ market power which results from mergers and takeovers may have led to interest rates and bank profitability changes. Mergers and acquisitions may constrain banks to redirect activities toward other more profitable businesses which outrun the costs` increase. Another effect may be the influence on capital adequacy, given that acquisitions and mergers may open the gate for a greater risk diversification while preserving the same capital base. Whatever the effects, one issue is clear: merged and not merged banks offer different costs and interest rates.

The direction taken by the Spanish banking industry nowadays results in total assets value of over a 1.5 billion EUR or in other words: the industry takes the fifth place in the European banking market. This estimation is driven by an analysis of past annual reports from the following banking companies: Banca March, Banco Atlantico, Banco Pastor, Banco Popular Espanol, Banco Sabadell, Banco Santander, Banesto, Bankinter, Triodos Bank.

Some of the Spanish banks have specialized in a certain area and are assessed according to the extra products and services they offer. For example Bankinter is Spain’s most prosperous online bank. This body is the first bank to offer online banking as a service for its clients. Other banks, such as Banco Santander, have extended and perfected the services for non-Spanish house-buyers, as they rise in Spain. These banks have employed people who know foreign languages such as English, French, German, Dutch, etc. in order to better serve the needs of the potential foreign home-buyers. They also offer a variety of accounts which can suit better the non-resident client’s needs in terms of receiving one`s rent or transferring money abroad.

In fact, the Spanish banks are officially divided by other criteria in terms of their function as banking institutions and not by the offered products. These are examples of clearing banks and savings banks. In addition, several foreign banks operate in the country. The clearing banks are amongst the biggest banks in Spain, and they include: Banco de Santander and Banco Atlantico. Most of the largest towns hold at least one branch of the main banks. Foreign banks are concentrated at the coastal resort areas and in the bigger cities, some of them being owned by the local banks. The Savings Banks are most popular in Spain: they are more heavily involved in charitable activities and invest in cultural organizations. Nevertheless, they are much less in number than the clearing banks.

The charges of the Spanish banks are somehow high, especially for payment of cheques and bank transfers. However, most of the Spanish banks offer a range of services such as insurance and investment banking. There is also a large availability of ATMs in Spain due to the fact that three ATM networks operate on the territory of Spain. These networks are 4B, ServiRed, and 6000.

Spanish banks are gaining more and more international presence in the European and non-European countries. Maybe, this fact is due to the soundness, the broad range of offered products, and the drive toward further development of the online banking services.

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