Spain | The cross-border activity of Spanish banking

Summary

Banking activity, understood as the channeling of savings into investment, is not restricted only to the local market with its domestic sectors, but also a relevant part is carried out by banks in their international activity.

Key points

• Key points:
• This presence can take the shape of different, more centralized business models, funded by financial centers or their parent company (such as German or British banks) or decentralized models supported by independent subsidiaries.
• This model of autonomous subsidiaries is the one chosen by Spanish banks to carry out their international expansion, with decentralized liquidity and capital management l, widely recognized in the literature and by the authorities.
• The activity via subsidiaries of Spanish banks is the best-known aspect of their international expansion and is mainly carried out in Latin America (Mexico and Brazil, among other countries), but also in the United Kingdom, the United States and Türkiye.
• In the case of Spain, purely cross-border activity (excluding funding provided via subsidiaries or to resident economic sectors in the domestic market) is less significant. According to the Bank of International Settlements (BIS), Spain’s cross-border assets exceed 900 billion dollars, ranking 11th in the world, far behind other major banking systems such as France and Germany.
• By sector, of the volume of cross-border assets held by Spanish banks, 44% is interbank exposure (i.e., to banks in other countries). Within the non-bank portion, 18% of the total corresponds to activity with non-bank financial institutions r, while the remaining exposure is mainly granted towards non-financial sectors, in order to support companies with their international expansion.

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