The banking system is well established and modern and compares favourably with those of northern European countries in terms of facilities offered. The variety of different banking organisation is staggering, including some familiar international names, but all banking activity is controlled by the Bank of Spain (Banco de España), which has its central office in Madrid and branches in all provincial capitals.
Choosing a bank can be difficult. New members of a community would be wise to ask the advice of local residents before making a choice. Also talk to the Manager, (most speak good English), and ask detailed questions about the facilities available and the bank charges. Another important factor for Internet users is the quality of online services provided by the bank.
There were once numerous different clearing banks. This has changed considerably in recent years as many banks have merged or been bought out by a larger bank. 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 again the product of two major banks including the originally state-owned Argentaria.
Other important banks in Spain include the Banco de Andalucía, Banco Atlántico 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 have none at all.
There are foreign banks that operate in Spain, although they tend to be concentrated mainly in coastal resort areas and in the large cities. British banking is represented by Barclays, the Royal Bank of Scotland (affiliated to the Santander bank) and Solbank, owned by Banco Sabadel. The American banks, Citibank and Chase Manhattan, are also present. Other foreign banks include Deutsch Bank (which has an agreement with the Spanish Post Office) and several Arab and Scandinavian banks. But remember they still operate under the control of the Bank of Spain.
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 Malaga province), La General (from Granada), Caja San Fernando (from Cadiz) and El Monte (from Seville and Cordoba). Savings banks usually offer a very high level of service and tend to charge less than the clearing banks.
Many ex-patriots living on the Costa del Sol have found it convenient to open accounts at banks in nearby Gibraltar, for many varied reasons. Be aware that from 1st July 2005 a European Union directive came in to force which requires banks within the EU, (of which UK, Spain and Gibraltar are members), to share information about interest earned on deposits.
In a bid to combat illegal money laundering, Gibraltar banks are required to ask account holders to provide some detailed questions concerning there identification, permanent address and account movements..
A current account (cuenta corriente) usually carries a very low interest rate, if any. You can ask for a cheque book.
Fixed Deposit Account
A fix deposit account (cuenta de imposición a plazo) will give you interest depending on the time period of the deposit and the amount deposited. Banks can be bargained with about these conditions!
Savings Book Account
A savings book account (libreta de ahorro) usually carries a very low interest rate (if any), but does give you a continuous written record of your account, and in some cases can be used in cash machines for withdrawing money.
There are now practically no restrictions or formalities to transferring funds to and from Spain from other countries of the European Union and the EES.
Transfers Outside The EU
If you want to make transfers to or from countries outside the Community area, consult your Spanish bank.
Transfer of Pensions - Varying Rates of Commission
Some banks are still charging heavy commissions on transfers of pensions from abroad.
Other banks do not charge on such transfer. It pays to find out the conditions offered by the different financial institutions.
Most banks have a facility for transferring funds easily via the internet.
You can order the bank to regularly pay certain bills when they come due - local taxes, refuse collection, electricity, water, phone, etc - by filling in a form supplied by the bank or the business billing you. Both the bank and the billing business must be informed of this standing order.
You must make sure that you have sufficient funds to pay such standing orders or you may arrive at your home to find essential services shut off for lack of payment (often requiring a reconnection fee!).
Banks have been known to make mistakes resulting in the same unpleasantness!
These can be requested from all Spanish banks. The format and period covered by the statement will vary. Online banking systems can provide statements directly from your personal computer for variable periods, 24 hours per day, 7 days per week.
Write cheques only in ball point pen or ink (never in pencil or typewriter with erasable ribbon!).
Do Not Make Cheques Out to the Bearer, ("al Portador")
Write (or accept) a cheque to the person/business that is to receive payment, and not to "al Portador", (bearer).
Restricting The Cheque To Named Person Or Business
To ensure that a cheque can only be deposited to the account of the person or business to which it is made, write "a abonar en cuenta" (to be credited to the account of) before the name of the recipient, or cross the front of the cheque with two parallel lines.
Do not leave spaces which may be used for increasing the amount.
Guard blank cheques, destroy excess cheques, and never leave a blank signed cheque with anyone.
Writing a cheque without funds in the bank is illegal.
As an expatriate or tourist you may have brought credit cards with you to Spain and found that you were able to use these cards to withdraw money from Spanish cash machines without a problem. You should be aware, however, that hidden commissions can be involved in these transactions.
It so happens that all banks in Spain belong to banking networks. The largest of these networks are known as '4B' and 'Servired'. Local bank consumers know which network their bank belongs to and usually try to only use the Cash Machines associated with their network - in order to avoid paying extra fees.
The bank that issued your credit card in your home country probably belongs to an international banking network. And this network could very well be networked with one of the Spanish networks. This would then entitle you to use either 4B or Servired machines without additional fees.
However, to take advantage of this option, you need to work with your home bank in order to find out which network you belong to. On the contrary, you will be subject to fees that vary from bank to bank - and which are often difficult to uncover, even via direct query.
Spanish Bank Cards
Spanish residents or non resident home owners who have a Spanish bank account will consider applying for a Spanish Credit Card. They are effectively managed by the host credit company – i.e. Visa or Master Card. They can be used to purchase goods and services, (including online shopping), or withdraw money from a cash machine.
Very often a one line summary of your credit card purchases will appear on your bank statement, whilst a separate detailed credit card statement will be posted to you.
Note: not all credit cards are accepted for online purchases. Cards issued by the bank backed by Visa and Master Card will almost certainly be accepted by most online companies.
Spanish Debit Cards
These operate very much as in the UK, in that transactions will be accepted as long as your current account balance is sufficient to cover the amount required.
Using Your Card in Shops, Restaurants & Petrol Stations
Be aware that many shops and supermarkets will ask for formal identification, or request your PIN no. via online terminals, when making purchases by cards. Most restaurants accept credit or debit cards without identification, or PIN no.. Most petrol stations will accept credit cards, but will ask you to type in your PIN no.
Lost or stolen cards should be reported immediately to your bank or credit company, so that they can be annulled. This can often be performed online. Normally, a new card will be issued within a short period.
There are numerous Cash Machines in Spain and you can even find them in larger villages, although you shouldn’t count on this, especially in rural Spain. Spanish Cash Machines 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 one linked to your bank there may be a charge. Some banks allow you to make three withdrawals a month from ‘foreign’ Cash Machines 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 Cash Machines 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 making theatre, cinema and sporting events reservations.
In recent years the Spanish banks have made great strides in enabling clients to manage their accounts from the comfort of their own homes, by providing access via the Internet. In conjunction with the wide use of cash machines, the necessity of physically visiting your branch has been reduced to a minimum.
The current situation compares very favourably to that of 20 odd years ago when the simple task of withdrawing funds from your account, was complicated and very time consuming.
Here is a summary of some of the online banking facilities offered by many of the banks:-
Statement of Accounts by variable periods
Bank Card information
Various types of national and international transfer of funds
Bank loan information
Standing Orders information
Mobile phone charging.
Contact your bank for an application to go online. As a security measure, the bank will normally post to your User Code and Password. (You can normally modify one or both of these at your will). Ensure that your password is kept secure. In addition, you will be provided with an extra security password, used for transactions that result in withdrawal from your account, (also modifiable at any time by yourself).
Each time you wish to access your account you need to enter your User Code and Password. From then on you can perform “passive” tasks, such as checking the account movements and printing statements. Each time you wish to transfer funds or charge your mobile, you must provide the extra security password, (sometimes via some very convoluted security procedures!).
Many banks provide multi-lingual screens for ease of operation by the non-Spanish speakers.
The building society concept, traditionally popular in the UK, does not exist in Spain. (The nearest equivalent is the Spanish Savings Bank, “Caja de Ahorro”). Thus the mortgage and general loan role are taken up by the banks.
The mortgage market in Spain has opened up considerably in recent years and now all banks generally offer mortgage facilities to both clients and non-clients, although obviously clients receive more favourable terms. In order to obtain a mortgage from a bank in Spain you must be over 25 and have a fixed employment contract or have been self-employed for at least 3 years. Residents can theoretically borrow up to 90% of the value of the property, although the amount is usually nearer 70 or 80% and the actual amount lent will depend on your income.
Non-residents can usually only borrow up to 60% and 50% maximums are also common. Note that not all banks will lend to non-residents. Mortgages are available for up to 25 years, although 10 or 15-year mortgages are the most common.
If you have read and digested all the above sections, you will have ascertained that choosing a bank and branch in Spain can be complicated and in any case will depend on individual requirements. Good advice if you move to a new area is to start by asking for recommendations from the local ex-patriots.
Here is a summary of the factors involved:-
Ease and cost of transferring funds
Interest rates on Saving Accounts
Bank Card facilities
Cash Machine Charges
Helpfulness of staff
Final piece of advice – visit the branch a few times to see how busy it gets – periodic long waits in queues are a pain!