Economy and Banking Sector of Spain

Spain is a developed country in southwestern Europe. After the death of the dictator Francisco Franco in 1975, Spain managed to make a peaceful transition from dictatorship to democracy accompanied by rapid economic modernization, which allowed Spain joining the European Union in 1986.

In early 2008, the global financial crisis burst Spanish property boom resulting in a severe economic recession from which Spain is yet to recover. Nowadays, tourism is the most important service sector of Spanish economy, contributing about 10% of GDP, while fertilizers and chemicals are the most prominent industry sectors in Spain. Although Spain has been traditionally an agrarial country, agriculture now contributes about 3% of Spanish GDP.

Spanish banking system was deeply affected by the financial crisis: in June 2012 Spain requested 100 bln EUR to recapitalize Spanish banks. Series of mergers and acquisitions took place in 2009-2014 resulting in significant decrease in the number of banks operating in Spain and enlargement of the remaining banks.

Location Southwestern Europe
Population (2016)46 438 422 ↓ (0.00%)
EU Status member since 1986
National Currency EUR (Euro) since 1 January 1999
    Nominal GDP (2015)1 081.2 bln EUR ↑ (+0.02%)
    Nominal GDP per Capita (2015)23 300 EUR ↑ (+0.02%)
    Real GDP Growth (2015)3.2 % ↑ (2014: 1.4 %)
Inflation Rate 
    CPI, MoM (Sep 2016)0.7 % ↑ (Aug 2016: 0.0 %)
    CPI, YoY (Sep 2016)0.0 % ↑ (Aug 2016: -0.3 %)
    CPI, Year Average (2015)-0.6 % ↓ (2014: -0.2 %)
Unemployment Rate (2015)22.1 % ↓ (2014: 24.5 %)
Government Bond Yield (Sep 2016)1.04 % ↑ (Aug 2016: 1.01 %)
Credit Ratings (as of Sep 2016)
    FitchBBB+ good credit quality, outlook stable
    Moody'sBaa2 lower medium grade, outlook stable
    S&PBBB+ lower medium grade
Withholding Tax 0.0 - 21.0%
Double Taxation Agreements 93 signed agreements
Information Exchange 
    Exchange on Request 9 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 14 May 2013, Model 1
Banking Sector
Financial Market Development 4.0 (max 7.0) rank: 71st out of 138 countries
    Banks' Soundness 4.7 (max 7.0) rank: 73rd out of 138 countries
Banking Industry Country Risk 5(1 - lowest risk, 10 - highest risk)
    Economy Risk 6
    Industry Risk 5
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)Aa2 high grade
    Foreign CurrencyAa2 high grade
Deposit Rates (Aug 2016, EUR)0.16 % ↓ (Jul 2016: 0.18 %)
Banking Sector Structure 
    Number of Banks264
    Recent Changes (2015) new banks: 4, closed banks: 13
    Consolidated Assets (2015) 3 664.41 bln EUR ↑ (+2.47%)
Major Banks
 Banco Santander  Caja de Ahorros y Pensiones de Barcelona
 Banco Bilbao Vizcaya Argentaria (BBVA)  Banco Popular Espanol
 List of Banks in Spain

Spanish Economy

National Currency

Spain joined the Euro Area on 1 January 1999.



According to Eurostat, nominal GDP of Spain in 2015 was 1 081.2 bln EUR.

Spain underperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.0% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 3.2% which was above the Euro Area average (1.6%) and above the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Spain.
Chart 1. Real GDP Growth in Spain. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Spain was 23 300 EUR.

Spain has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -5.3% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Spain; European Union = 100.
Chart 2. GDP Per Capita at Purchasing Power Parity in Spain; European Union = 100.

Inflation Rate

According to Eurostat, inflation rate in Spain in 2015 expressed as annual percentages of average consumer prices was -0.6% which was below the Euro Area average (0.0%) and below the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Spain.
Chart 3. Inflation Rate in Spain. Source: Eurostat, International Monetary Fund.

Taxation in Spain

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Spain are shown in Table 1.

Dividends Interest
Natural person, resident 21.021.0
Natural person, non-resident 21.00.0
Table 1. Withholding tax rates in Spain.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Spain signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Argentina (Dec 2013)
 Bosnia and Herzegovina
 Costa Rica
 Cyprus (May 2014)
 Czech Republic
 El Salvador
 Hong Kong
 Iran, Islamic Republic of
 Korea, Republic of
 Kuwait (Jul 2013)
 Moldova, Republic of
 New Zealand
 Russian Federation
 Saudi Arabia
 South Africa
 Trinidad and Tobago
 United Arab Emirates
 United Kingdom (Jun 2014)
 United States

There are also several agreements between Spain and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Dominican Republic
 Uzbekistan (Jul 2013)

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Spain signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Bonaire, Saint Eustatius and Saba
 San Marino
 Sint Maarten (Dutch part)

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Spain signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information



Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Spain has FATCA agreement with the U.S. in effect since 14 May 2013 (Intergovernmental Agreement Model 1). Financial institutions operating in Spain are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Spanish financial accounts hold in U.S. financial institutions will be reported to Spanish authorities.

Further Information:
FATCA and European countries


Spanish Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Spain is scored 4.0 out of maximum 7.0 and ranked 71st out of 138 analysed economies. Soundness of banks is scored 4.7 bringing Spain into the 73rd place, trustworthiness and confidence of financial market is scored 4.2 (70th place).

Financial Market Development in Spain.
Chart 4. Financial Market Development in Spain. Source: WEF.

Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

Spain is included into group '5' with economic risk scored '6' and industry risk scored '5'.

BICRA Group 5
Economic risk 6
    Economic resilience intermediate
     Economic imbalances very high
    Credit risk in economy intermediate
Industry risk 5
    Institutional framework intermediate
    Competitive dynamics intermediate
    Systemwide funding high
Government support assessment supportive

Table 2. BICRA for Spain. Source: S&P's.


Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Spain are summarised in Table 3.

Scheme Participantsall credit institutions operating in Spain, branches of non-EU banks, branches of Spanish banks abroad
Scheme Exemptionsbranches of EU-banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Covered Accountscredit balances on accounts, nominative deposit certificates constituted in the EU
Covered Currenciesall
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 3. Deposit guarantee scheme in Spain.

Further Information:
Deposit Guarantee Schemes in Europe


Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Euro) deposit ceiling for Spain is set to Aa2 (high grade), foreign currency deposit ceiling is Aa2 (high grade).


Deposit Rates

In Aug 2016, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.16% which was below the Euro Area average (0.53%).

Deposit Rates in Spain.
Chart 5. Deposit Rates in Spain. Source: ECB.

Further Information:
Compare Bank Deposits in Spain


Banking Sector Structure

Currently there are 264 credit institutions operating in Spain.

Recent structural changes (2013 - 2015) of the banking sector of Spain are summarised in Table 4.

Number of Opened Banks164
Number of Closed Banks112113

Table 4. Recent structural changes in the banking sector of Spain.

All the credit institutions operating in Spain can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Branches of foreign banks86
Central banks1

Table 5. Number of banks by category in Spain.

The list of the most recently opened banks in Spain is provided in Table 6.

NameStart Date
 ABN AMRO BANK N.V.. S.E (new)December 2015
 CM-CIC Bail. S.E. (new)September 2015
 Banca Farmafactoring. SPA Suc en España (new)May 2015
 China Construction Bank (Europe). S.A.. S.E (new)March 2015
 Mirabaud & CIE (Europe), S.A., S.E. (new)December 2014
 Sumitomo Mitsui Banking Corporation Europe Ltd., S.E. (new)December 2014
 A&G Banca Privada, S.A. (new)July 2014
 Banca Popolare Etica Sociedad Cooperativa Per Aziones, S.E. (new)July 2014
 Banco de Crédito Social Cooperativo, S.A. (new)February 2014
 Evo Banco S.A. (new)February 2014

Table 6. The most recently opened banks in Spain.

There are 86 branches of foreign banks from 15 different countries in Spain. Table 7 shows 10 countries having the biggest number of branches in Spain.

Country of OriginNumber of Branches
 United Kingdom11
 United States2

Table 7. Number of branches of foreign banks in Spain grouped by country of origin.


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