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OPINION

Spain: Giving savings banks a good name

Spain’s thriving cajas show the rest of Europe the way forward.

“The problem is not so much
ownership as it is regulation that
encourages competition. The
European Commission, no fan
of the model, should bear that
in mind”




Savings banks have a bad name in some financial circles. The term "savings bank" tends to conjure up images of small, cossetted institutions run poorly by interfering politicians and university chairmen that make life unfairly difficult for honest, hard-working commercial banks. The truth, however, is simply that when it comes to trying to understand and compare banking systems across Europe, "savings bank" is about as useful a term as hedge fund. Although there are indeed a number of Landesbanken and popolare in Germany and Italy that might look like stereotypical savings banks, it’s hard to find many such institutions among Spain’s cajas.

The reason for this is simply that although Spain’s savings banks have just as many politicians on their boards as their cousins elsewhere in Europe, they have always had to compete on a fairly even footing with their private sector compatriots. In some respects they have even had to compete with one arm tied behind their backs because they are restricted in their capital-raising and for years were forbidden to expand outside their localities.

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