Private banks and savings banks are of particular importance in the banking industry in Spain, because of the volume of their business and because they are active in all sectors of the economy.

In 1974, a liberalization process of the banking system was initiated, based on the concept of freedom to open branches. In 1987, interest rate liberalization was established, while 1991 witnessed the formation of large banking groups, and previously imposed credit restrictions were lifted with a view to cooling down the overheated economy, and at the end of 1992, the obligatory investment coefficients demanded of the banking institutions were eliminated.

Between 1987 and 1991, the banking sector underwent a profound transformation, accelerated by the prospect of the Single Market and the liberalization of capital, which in recent years has produced a heavy concentration of financial institutions. Of the 64 Spanish banks existing in 1976, only 35 still existed in 1991.

With respect to the principal national banks, in 1977, the Bank of Bilbao and the Bank of Vizcaya were the first to initiate the process of merging. This initiative was completed in 1989, giving way to the present Bank of Bilbao Vizcaya (BBV). In 1991, the Banco Central and the Banco Hispano Americano also merged to form the Banco Central Hispano (BCH), the largest private bank in Spain with respect to volume of deposits.

On December 28th., 1993, the Banco de España intervened in Banesto naming a new Board of Directors and guaranteeing all the bank's deposits. Four months later (April 25th., 1994) the crisis produced in the banking system owing to the aforementioned intervention was resolved when Banesto was auctioned off to the Bank of Santander. Besides the Santander, the Banks of Bilbao-Vizcaya and Argentaria also bidded at the auction.

The level of concentration is at present similar to average European levels; in Spain, the three largest banking institutions account for 38% of deposits, compared to the corresponding figure of 41% for the European average.

The most important changes in the banking sector are being witnessed in the area of the Public Bank. Up to 1990, the offical credit institutions were dependent on the Government through the Official Credit Institute (ICO). From 1991 on, this structure was transformed by the creation of the Banking Corporation of Spain (CBE), established by Law 25/1991 of 21 November, based on the Royal Decree Law 3/1991.

The Corporation chose to model itself as a federal bank, and is composed of three large financial groups:

a) the so-called Official Credit Entities (EOC) - the Bank of Industrial Credit (presently under the auspices of the Banco Exterior de España), the Mortgage Bank of Spain, the Bank of Local Credit and the Bank of Agricultural Credit -. In addition to specialized banks, these entities also bring to the Banking Corporation of Spain joint shares in various companies;

b) the Banco Exterior de España, which brings to the Corporation the most diversified group of credit institutions and other financial and insurance companies;

c) the Postal Savings Bank (Caja Postal de Ahorros), at present an incorporated company with banking status, and the companies forming the FINANPOSTAL group.

This federal organization adopted by the Banking Corporation of Spain (ARGENTARIA) represents a new definition of the structure and activities of the public capital credit institutions, which are guided by the basic principle of unit specialization and the coordinated exploitation of each entity's potential. This approach points to a new initiative conceived as a response to the challenges posted by the growing liberalization and interrelation among diverse systems, and in particular, to the shaping of a genuine single European Union market of financial services.

During 1993, ARGENTARIA, founded less than two years before, floated approximately 50% of its capital. ARGENTARIA currently has 550,000 share holders, 7,000 are Spanish institutional ivestors and some 900 ones from the international capital markets.

Foreign banks have represented an innovating force in Spain since their arrival in 1978. In 1994, 75 foreign banks were operating in the Spanish market, with a share of approximately 20% of total creditary investment. The majority of foreign banks focuses on the corporative banking service, since they are limited as to the amount of deposits and number of branches they may hold in the domestic market. The legal framework established by the E.U. calls for the equalization of the foreign banks with their Spanish counterparts in a maximum time limit of seven years, which terminated in 1993.

Most Spanish banks provide a full range of services and operations to corporate and private customers, including the handling of collections and payments outside Spain through their organizations abroad.

The following is a list of Spanish Banks and Savings Banks with a Web site in Internet: