The number of banks has increased considerably over the last few years. In Spain you will find the two mainstream forms of banking - clearing banks and savings banks - as well as many well known private banks.
Private banking, also known today as "wealth management" is well established in southern Spain, especially in the Marbella area. This form of banking can be useful to those who have 100,000 euros or more to invest and seek management for. Generally, a private banker will focus on helping you to pursue financial stability and growth. Naturally, this will be done in the context of your personal level of risk tolerance. In exchange, you can expect to be charged fees based on the type of relationship you form. For example, if you choose to limit the private banker's role to that of a pure advisor, fees will inevitably be higher than those charged to clients depositing money into the bank and using its services. A private banker will probably emphasise the confidential nature of your relationship. And you can expect this condition to be upheld at all costs in the case of legitimate clients.
Savings & Clearing Banks
Banking has become highly automated and with regard electronic banking they compare favourably with other European countries and their ATM´s are among the world´s best. In addition to clearing banks, Spain has over 80 savings banks which were originally charitable organisations granting loans for public interest and agricultural policies. They comprise co-operative savings banks whose members are agricultural co-operatives, although they play only a small part in Spain´s banking system and hold just a few per cent of total bank assets. Savings banks are similar to building societies in Britain and savings and loans in the USA and hold over a third of all deposits.
There are around 50 foreign banks and these are well represented in Andalucia, although there are fewer and with an overall smaller market share, than in most other European countries. The most prominent British banks in Spain are Barclays, Solbank and Lloyds. These banks are full members of the Spanish clearing and payment system and can provide normal cheque accounts, cash and credit cards, and direct debit/standing order services. Banks located in the major tourist regions generally have at least one English speaking member of staff.
Normal Bank opening hours in Spain are from 8.30 am or 9.00 am until between 13.30 and 14.30, Monday to Friday and from 8.30 and 9.30 until 12.00 or 1300 on Saturdays in winter (banks are closed on Saturdays from June to September or October).
Opening an Account
You can open a bank account whether you are a resident or non-resident. It's best to open a Spanish bank account in person, rather than by correspondence from abroad. You must be aged 18 and provide proof of identity, such as a passport, your address in Spain and your NIE. If you wish to open an account with a Spanish bank while you're abroad, you must first obtain an application form, available from foreign branches of Spanish banks or direct from Spanish banks in Spain.
Although it's possible for non-residents to survive without a Spanish bank account by using cash and credit cards, eurocheques and traveller's cheques, this isn't wise and is an expensive option. You will also need a bank account to pay utility and tax bills which are best settled via direct debit.
Checking accounts are provided by all Spanish banks however, overall, cheques are not used as payment. All cheques, including post dated cheques are payable on presentation and cheques are valid for six months from their date. If you write a cheque without sufficient funds in your account, your bank must pay out whatever is in your account as part payment, although this isn't always done. It is illegal to overdraw a bank account in Spain without prior agreement and can led to many problems.
It's possible to open a savings account with all clearing and savings banks in Spain. There are varying interest rates, minimum deposits and withdrawal restrictions, depending on the type of account and the bank. For short-term savings and small amounts, it's best to open a savings account where funds are on call and withdrawals can be made at any time. Interest is generally paid twice a year. However, for residents, the interest earned on bank accounts and deposits is subject to a 25% withholding tax at source on account of personal income tax.
Cash & Debit Cards
All banks offer customers a combined cash and debit card which are widely used and accepted throughout Spain. Purchases and cash withdrawals are automatically debited from your cheque or savings account. You don't receive a monthly statement and can't run up bills with a cash or debit card. Cards allow holders to withdraw up to 300 € a day from automated teller machines or ATM's and obtain account balances and mini-statements. There are three ATM networks - Telebanco 4B (indicated by a blue and yellow striped logo with the inscription 4B), Red 6000 and Servired. Cash can also be obtained from the ATM's of other networks although there will be a small charge.
All Spanish banks provide loans and overdrafts and are quite happy to do so to foreign residents, particularly if they are homeowners. It pays to shop around for a loan as interest rates vary considerably depending on the bank, the amount and the period of time.
Most banks will have a standard criteria before considering a mortgage application. For example, you have to be 25 years or over, in full time stable employment, or have been self-employed for a minimum of three years. How much you can borrow will depend how much income you receive and what financial commitments you have. In general, you can borrow up to 70% of the purchase price of the property or to a maximum of 2.5 times your gross annual income. .In order to check that the price is appropriate and fair, the bank will request a professional evaluation. This comprises a detailed report in respect to the quality of construction and material use, the situation, state of repair, etc. of the property and, most important of all, its market price which takes all the above into account.
The fee for the evaluation is approximately 270 € but obviously varies according to the size of the property. A search must also be made in the Land Register and a certificate issued for the corresponding entry to check on the possible existence of mortgages or loans. If the home you are buying is still under construction, the builder may require the cost of the property to be paid in a series of payments. Most lenders can provide a mortgage that matches these requirements subject to certain safeguards.
Financial institutions will offer you a choice of repayment plans which usually include: Endowment Mortgage - whereby every month or quarter you make two separate payments, one for the interest on the loan, the other for the premium on the endowment policy. Capital Repayment Mortgage - whereby you make either monthly or quarterly payments of interest and capital on the mortgage. During the early years, each monthly payment comprises mainly of interest. In later years, more of the capital is paid off. You will generally be given a period of up to 20 years to repay your mortgage and it is your responsibility to ensure that you have a suitable mortgage protection policy to repay the loan if you die before the end of the mortgage term. In general, you can expect to pay approximately 10% of the property purchase price in associated taxes and fees.