Spain, the European Union's fifth largest economy, has
suffered badly from the global financial crisis as well as from the bursting of
a home-grown property bubble, both of which have left the country in an
enduring economic depression. By late 2012, unemployment in Spain hovered
around the 25% level, with fully half of under 25 year olds out of work.
A prominent feature of the Spanish banking market is
the presence of the cajas de ahorros, or savings banks (‘cajas'), which first
appeared in the early part of the 19th century, and which are typically closely
linked to their territory of origin. These mutually-owned institutions were
mandated to finance development in their communities, and traditionally held
strong reputations. However it was these local banks which played a key role in
financing the unsustainable housing boom which began in 1997. By the time this bubble
ended in 2008, many of the cajas were left with severely devalued assets, and a
number of weaknesses were exposed in the regulatory framework governing the
The result has been an unprecedented period of
reorganisation of the Spanish banking sector, with the number of cajas being
reduced from 45 to 11 through government interventions, mergers and takeovers. This
included the creation in 2010 of Bankia, now Spain's fourth largest bank by
asset value, through the merger of seven regional savings banks. Although created
as a private bank, by May 2012 the bank required a significant injection of
government capital, and a 45% stake in the institution was taken into public
Spain's biggest three largest banks by assets, Banco Santander,
BBVA and La Caixa, are generally considered to be in a
better position than the remaining cajas and the ailing Bankia, after a major
audit of debts showed they would be unlikely to require recapitalisation. In
addition, Santander and BBVA in particular are significant global players, with
operations in the Americas and elsewhere in Europe which will help to
compensate these banks for the negative impact of Spain's economic problems.
The Spanish financial sector is supervised by two distinct entities. The
Banco de España (Bank of Spain) is the
national central bank and supervisor of the Spanish banking system. Its
activity is regulated by the Law of Autonomy of the Banco de España. Its responsibilities
include financial regulation and supervision, the regular monitoring of the
Spanish, Eurozone and world economies, the evaluation of economic policies and
the issuing of banknotes.
The Comisión Nacional del
Mercado de Valores (CNMV, or National Securities Market Commission) is the government
agency in charge of supervising and inspecting the Spanish stock markets and
the activities of all the participants in those markets. The purpose of the
CNMV is to ensure the stability and transparency of the financial markets and
to protect investors.
Government policy on bank reform
The Spanish banking crisis has prompted a major restructuring of the banking
sector, which has included the consolidation of the cajas, as well as the reform
of the legal frameworks governing them, including strengthening of conflict-of-interest
rules and governance requirements.
In June of 2012 Spain requested €100bn in European aid
to recapitalise its banks, although an independent audit of toxic assets later the
same year concluded that a rescue package of only €53.75 billion would be
necessary. Almost half of this figure will go to Bankia SA alone, with Novagalicia
Banco, Catalunya Bank and Banco de Valencia requiring a total of €21 billion.
In order to further address the problems of the sector, the Spanish
government established in November 2012 a so-called ‘bad bank', known by the
acronym Sareb (Sociedad de Gestión de Activos Procedentes de la
Reestructuración Bancaria, S. A., or ‘Society for the management of assets
proceeding from the reconstruction of the Banking System'). The state-owned bank
will take toxic assets off the banks' balance sheets, hopefully leading to a
resurgence in lending among the banking sector as a whole.
Independent sustainability and reform initiatives
BankTrack partner SETEM has
established the Finanzas Eticas website (Spanish only) to promote ethical banks, credit unions and other ethical
finance institutions in Spain, including Triodos, Coop57 and Fiare.
The Banca Armada project
tracks the value of Spanish banks' investments in the arms industry, and aims
to ‘inform and sensitize society to demand that Spanish financial institutions
to change their policies and end all relations with socially irresponsible