The weak link
Five out of seven failing banks identified by the European stress tests in 2010 were Spanish savings banks. Rafael Nunez-Lagos reports on their future
March 09, 2011 at 06:22 AM
8 minute read
Savings banks (cajas de ahorro), are a type of credit entity that represents almost half of volume within the Spanish financial sector. Akin to French caisses d'epargne or Italian casse di risparmio, savings banks are traditional, locally-orientated entities of variable (but generally limited) size, with strong economic and social ties to their home region.
Although savings banks fully participate in the market, they are a special category within the financial services industry, as they are structured as foundations rather than companies. As a result, they are governed by representatives of collective stakeholders; mainly customers, employees and local authorities.
Any positive result is allocated to social welfare and cultural projects. Owing to their distinctive nature and the social functions they carry out, which are private but of public relevance, savings banks are subject not only to the general regulations governing the activity of credit entities, but also to specific legislation on their establishment, governance and corporate transactions. This legislation is mainly regional in scope and operates within the basic national framework.
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