Banks and banking in Spain

The Spanish banking system is well established and modern with all banking activity controlled by the Bank of Spain (Banco de Espana), which has its central office in Madrid and branches in all provincial capitals.

Banks are divided into clearing banks and savings banks and there are several foreign banks that also operate in Spain.

Clearing Banks

As with banks worldwide there has been many mergers and buy outs with the big banks in Spain. At present the two banking giants in Spain are the BSCH (Banco de Santander y Central Hispano), which resulted from the merger of the Santander, Central and Hispano banks and the BBVA (Banco Bilbao Vizcaya Argentaria) which is the result of the merger of two major banks including the originally state-owned Argentaria. Other important banks in Spain include the Banco de Andalucia, Banco Atlantico and Banco Zaragozano. Most large towns have at least one branch of the main banks and in cities there are several branches. Smaller towns usually have a very limited number of banks (perhaps just one) and villages sometimes will have none at all.

Foreign Banks

There are now many foreign banks that operate in Spain, although they tend to be concentrated mainly in coastal resort areas and in the large cities. These banks are British by name but are totaly separate from their British parents. To name but a few there are Barclays, the Royal Bank of Scotland (affiliated to the Santander bank) and Solbank. The American banks, Citibank and Chase Manhattan are also present. Other foreign banks include Deutsche Bank (which has an agreement with the Spanish Post Office) and several Arab and Scandinavian banks.

Savings Banks

Savings banks (known as cajas de ahorro) are very common in Spain and apart from the Catalan La Caixa and Caja Madrid that are both present in most of the country, tend to be regional or provincial.

Savings banks also act as charitable institutions and invest part of their profits in social and cultural associations. In Andalucia the main savings banks are Caja Rural, Caja Mar, Caja Sur and UniCaja (originally from the province of Malaga), La General (from Granada), Caja San Fernando (from Cadiz) and El Monte (from Seville and Cordoba).

Savings banks, although popular, are considerably less so than the clearing banks.

Internet Banking

Internet banking has taken off in a big way over recent years in Spain and more and more Spaniards are now using online services. For many years Spain had the highest number of banks providing services on line but the fewest number of online users. This has changed considerably over the last few years.

Practically all the banks now offer Internet banking and as long as you have a user name and password you can carry out most of your banking transactions online. Some banks even offer online credit facilities. Internet-only banks operating in Spain include ING (part of the Nationale Nederlande group), Patagon (linked to the BSCH group) and EvolveBank (a subsidiary of Lloyds / Chase Manhattan). Most Internet banks offer preferential rates of interest for savings.

Bank Charges

Spanish bank charges are notoriously high and a large part of some banks' profit margins are made thanks to the charges paid by clients for just about every banking transaction imaginable. Charges are particularly high for the payment of cheques into your account and for bank transfers. Before you open an account, ask for a breakdown of all charges including annual fees. If you plan to make a lot of bank transfers every year, you should carefully consider how much this is going to cost you. You may be able to negotiate more favourable terms if you agree to maintain a minimum amount in your account or if you treat the branch manager to at least a coffee in the local bar!

Financially savvy people prefer to leave overseas money transfers to their foreign currency brokers. These specialists operate on behalf of hundreds of clients and get much better conditions in the currency wholesale markets, just like financial brokers do for investors who invest their savings on collective investment funds in order to get a better return.

Bank Transfers

If you plan to make Currency exchange and money transfers to Spain, you should enquire about the facilities a bank offers for this (e.g. once the money arrives in your account, how long is it before you can use it) and what bank charges apply for using this facility.

Extra banking services

Banks sometimes offer a range of services such as insurance and investment banking, which could be useful to you. Bear in mind, however, that these services can be more expensive than those offered by specialised companies and aren't likely to be independent.

Banks with English speaking staff

If you're not planning to learn to speak Spanish or feel that Spanish banking language is beyond you, you may wish to base your choice of bank on the availability of English-speaking staff. Banks in resort areas and in large cities usually have at least one member of staff who speaks English, although you shouldn't count on this.

Banks in towns and villages in rural areas generally don't have English-speaking staff. When choosing a bank, it's also a good idea to ask friends and acquaintances for recommendations (or otherwise) and if after a while, you find you're not happy with your bank, you can always open an account somewhere else!

Opening your bank account

Both residents and non-residents can open a bank account in Spain. You need to be over 18 and provide proof of identity such as a passport. If you're a resident you'll need to provide your residence card details. If you own Property in Spain, the bank will probably also require your NIE (Numero de Identificacion de Extranjeros), which all foreign property owners must have. You can open the bank account in person or by postal application, although this is probably only advisable as a last resort.

Types of bank accounts

Most people open a current account or a savings account with their bank. A current account in Spain is much the same as that in any country and you'll be issued with a cheque book and ATM / debit card. Note that cheques are generally not accepted as a form of payment in shops and businesses. Debit and credit cards are. You will receive monthly statements regarding your account.

Some banks pay nominal rates of interest on current accounts, although by the time withholding tax at 25% has been deducted, you sometimes wonder why they bother.

Saving Accounts

Saving accounts are generally different from current accounts in that they offer interest, although interest rates paid at present are very low (only marginally higher than current account rates). With savings accounts you are issued with a cash book where all transactions are recorded. In some banks, you can use the cash book to withdraw money from cash machines. Savings accounts sometimes include the option of a debit card, but you can't have a cheque book.

Investment Accounts

Long-term savings accounts and investment accounts are also available, although these generally have restrictions on the amount you can withdraw or penalties for withdrawing funds before a fixed period of time. Interest rates vary, although at present no standard savings accounts in Spain offer a good rate of interest.

The best rates are obtained from investment account linked to stocks and shares, although there are associated risks of losing some or all of your investment.

ATMs - Cash machines

There are numerous ATMs (Cajeros) in Spain and you can even find them in larger villages, although you shouldn't count on this, especially in rural Spain. Spanish ATMs are very sophisticated and start by offering you a choice of language (usually English, French, German or Spanish). Instructions are easy to follow and self-explanatory.

Three ATM networks operate in Spain – 4B (the most common), ServiRed and 6000. You can generally use any ATM to access money from your account, although if the ATM you use isn't the one linked to your bank the charges can be extremely high and will be linked to the amount you withdraw.

Some banks allow you to make so many withdrawals a month from before they charge you. Others are not so generous. Because of this, you may wish to consider opening a bank account with the bank owning your nearest or most convenient ATM.

As well as straight-forward cash withdrawals, some ATMs allow you to carry out a wealth of other transactions including paying cash into your account, consulting your balance or most recent movements, renewing your mobile phone card or even making theatre, cinema and sporting events reservations.