Spain - Commercial Guide
Trade Financing

Discusses the most common methods of payment, such as open account, letter of credit, cash in advance, documentary collections, factoring, etc. Includes credit-rating and collection agencies in this country. Includes primary credit or charge cards used in this country.

Last published date: 2020-08-07

Methods of Payment

In general, foreign products are imported to Spain by an irrevocable letter of credit, but other forms of payment can be negotiated when a relationship has already been established between exporter and importer/distributor. 

EU Spanish legislation stipulate that payment conditions should fall within 30, 60 or 90 day terms.  Nonetheless, large corporations (including large retailers) often impose longer payment terms of up to six months.   The government may defer many payments - depending on the department, payments may be deferred up to one year.

The most common methods of payment for international trade are: 

  • Check (cheque): Bank checks guarantee secure transactions, while personal checks do not. Personal checks do not provide adequate guarantees against commercial risk because the bank does not guarantee the funds in the account of the issuer. 
  • Payment Order (orden de pago): Through a payment order to the bank in Spain, the importer pays the exporter’s bank the amount due by using a correspondent bank in the base country. The initiative for the payment in this case is the importer’s responsibility. These transfers, via SWIFT (Society for Worldwide Interbank Financial Telecommunications), are common in the Spanish banking system. 
  • Documents against payment (remesa documentaria): Exporters use this instrument to ensure the possession of the merchandise until they have received payment or at least until the importer accepts a bill of exchange. 
  • Documentary Credit (crédito documentario): This enables safer transactions owing to the involvement of banks in both countries. In this case, the importer’s bank insures against the entry of a third party (an exporter, the bank or a correspondent bank).

Further counseling on international payment methods can also be obtained from U.S. Export Assistance Centers,   The International Chamber of Commerce (ICC), local chambers of commerce, the U.S. Government Export Portal and at Unzco.

The ICC also has a mechanism to settle disputes, Dispute Resolution Service.

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide available at www.Export.gov/TradeFinanceGuide

Banking Systems

Spain’s expansive and modern financial system is fully integrated with international financial markets. The system includes credit, stock and money markets, and specific markets for derivatives.

The banking system is regulated by three entities, the Secretary General of Treasury and Financial Policy, the Directorate General of International Trade and Investments in the Ministry of Economy and Competitiveness, and the Bank of Spain. Spanish legislation on bank incorporations is regulated by Royal Decree 1245, dated July 14, 1995.  When looking to set up a branch or representative office in Spain, foreign banks that have already been authorized to operate in another EU member country do not need authorization from the Bank of Spain. Conditions of access to the Spanish financial system are the same for both Spanish and foreign companies.

The EU single market in banking and insurance services has changed the Spanish legal framework. Spain has adopted EU Directives that regulate the equity and solvency ratio of credit institutions and Council Directives on banking coordination. It has also adopted EU Directives on the securities market and insurance services. As Spain is a member of the Eurozone, it lacks traditional monetary policy tools; interest rates instead fluctuate in response to actions of the European Central Bank.

The banking industry in Spain expanded significantly during the country’s 15 years of rapid economic growth prior to Spain’s housing bubble and the international financial crisis, which forced Spain in 2012 to request EU bailout funds to recapitalize and restructure its financial sector.  In the run-up to the housing crisis of 2008, Spanish banking was dominated by regional savings banks (“cajas de ahorro”), which were often controlled by political interests and whose poor lending practices fueled the rapid growth of Spain’s housing bubble.  The Spanish government used the bailout in 2012 to close and recapitalize banks as well as shift bad assets into a bank (SAREB) specifically created to manage them.  As a result, Spain’s banking sector consolidated significantly; most of Spain’s regional savings banks have closed or merged.  Since the bailout, Spain’s banks have made significant progress deleveraging bad mortgages but are still cleaning up their balance sheets. After years of very tight lending in response to the real estate and financial crises, Spanish banks have begun to increase access to consumer and commercial credit.

The GOS website has additional information on relevant data on the Spanish financial sector and a special section on the status of the financial sector reform and international assessments,

Operators in the Spanish financial system

The Bank of Spain listing shows:

Supervised Institutions in Spain (248)

Credit institutions (192)

  • Banks.
  • Savings banks.
  • Credit co-operatives.
  • Branch offices of foreign credit institutions.

Other institutions (53)

  • Specialized lending institutions.
  • Electronic money institutions.
  • Payment institutions.
  • Mutual guarantee and re-guarantee companies.
  • Currency exchange establishments authorized to buy and sell foreign currency.
  • Valuation companies.
  • Company for the management of assets from the restructuring of the banking system (SAREB).
  • Banking foundations.

Money Market Funds (2)

Central bank (1)

Source: Bank of Spain

Spain has one of the largest banking branch networks in the in the Eurozone despite significant consolidation of the sector since the financial crisis.  Given its still relatively high penetration of banks per capita and banks’ tight profit margins, analysts expect further consolidation of Spain’s banking sector.

Other credit entities:

  • Credit financial establishments specialize in asset products such as leasing, lending, factoring, and mortgage loans. They cannot take public deposits.
  • ICO - Instituto de Crédito Oficial (Institute for Official Credit) serves as the State’s finance agency and investment bank. 
  • Investment institutions

Collective investment entities:

  • Investment companies dealing in marketable securities and property assets.
  • Investment funds dealing in marketable securities, money market assets, property assets, mortgage securities, pension plans and funds.
  • Venture capital funds and companies.
  • Other investment entities. 

Brokers: 

  • Stock market: Stockbroker companies and agencies.
  • General: Banks, security management and deposit companies.
  • Insurance and re-insurance companies and insurance brokers.

Spain has improved its investment and brokerage entities. Governing investment entities are required to provide financial reporting to the public and recognize new types of investment organizations such as venture capital funds and companies. Spain has implemented tax relief measures in an effort to reduce extra costs involved in using this form of investment.

Money Market

Bank of Spain bases Spain's money market essentially on the issuance of short-term securities, taken up by banks, finance companies and money market operators. The Spanish money market has become increasingly important in recent years after the system was made more liberal and flexible. The government debt market is also important in Spain, and both residents and foreigners invest in it. For non-residents, tax arrangements for investments in these securities are quite favorable.

           Credit Maket

The Spanish credit market is structured around private banks, which use their funds to provide financing for the private sector. These banks also operate as investors and underwriters in the stock market since they are able to adjust their liquidity by inter-bank and money market transactions. Liberalization of capital movement within the EU has made it easier for Spanish companies to obtain financing from abroad.

           Stock Market

Bolsas y Mercados Españoles (BME) is the Spanish company that deals with the organizational aspects of the Spanish stock exchanges and financial markets, and includes the stock exchanges in Madrid, Barcelona, Bilbao and Valencia. BME has been a listed company since 14 July 2006 and a constituent of IBEX 35—the benchmark index for Spain’s principal stock exchange—since July 2007.

The Spanish system of market regulation is based on a British/U.S. model. Spain has a single computerized and centralized continuous stock market that penalizes insider trading. The National Stock Exchange Commission, CNMV, supervises the system and cooperates in developing its regulations.

The competitive securities market has a three-day settlement system. Trading on credit is permitted; new hedging instruments, index, and warrant options are available. The government has enacted stricter and more comprehensive regulations regarding takeover bids. Other positive developments in Spain’s stock market include establishment of futures and options markets, plus an unofficial second market for trading in fixed-income assets. These advances have made the Spanish securities market safer and more transparent.

Pension Plans and Insurance Companies

Security investment companies and funds in Spain have increased in recent years. Employers, associations, and financial entities are able to promote pension plans. These plans include favorable tax treatment and restrictions on use of funds before retirement, death or disability. Accumulated savings in pension plans may also be used in the event of long-duration unemployment or serious illness. Private insurance legislation, Law 30/1995, requires companies to formalize their pension plans with an external fund or insurance contract.

The life insurance market has also grown substantially in Spain. This is mostly due to the similarities between survival insurance contracts, which include favorable tax treatment, and traditional saving formulae. The government prohibits the sale of short-term survival insurance with low actuarial content. In recent years, international insurance companies have begun operating in Spain by forming subsidiaries and branch offices or by purchasing existing companies. In general, companies have attained profitable results and excellent market positions.

Foreign Exchange Controls

Some main features of key legislation on foreign transactions (Royal Decree 1816/1991) include: 

  • Safeguard clauses -- Under exceptional circumstances, this law authorizes the Spanish government to prohibit or limit certain financial transactions with non-residents if the transactions affect Spanish interests, or if they affect measures adopted by international bodies of which Spain is a member. The Ministry of Economy or the Council of Ministers may invoke these safeguards if necessary. 
  • Documenting transactions -- For statistical purposes, banks must document money transactions. 
  • Declaration to the Bank of Spain -- Notification must be given to the Bank when certain transactions occur between residents and non-residents. These transactions may include financing and deferral of payments and receipts for over a year, offsets of credits and debits on commercial and financial transactions, or financial loans received from non-residents. 
  • Prior notification -- This regulation requires prior notification for the export of coins, bank notes and bearer checks, in either local or foreign currency, to non-E.U. countries for amounts of more than Euros 6,000 (USD 6,720 at average 2019 exchange rate) per person, per trip. Prior notification is also required for quantities of more than Euros 6,000 (USD 6,720) coming into Spain. 
  • Prior authorization -- Prior administrative authorization is required for the export of coins, bank notes, and bearer checks, in either local or foreign currency, for amounts over Euros 30,000 (USD 33,600) per person, per trip. 
  • Bank accounts -- Non-resident individuals and companies can maintain bank accounts in Spain and do so under the same conditions as residents. The only requirement to have a bank account is documentation of non-resident status. For exchange control purposes, residents are individuals who live in Spain, companies with registered offices in Spain or branches/subsidiaries of foreign companies or of individuals living abroad.
  •  Check here for more details on exchange control regulations:

US Banks & Local Correspondent Banks

U.S. Banks in Spain: Of the U.S. banks listed below; none offer retail-banking services.

JPMorgan Chase Bank National Association

Sucursal en de la Castellana, 31
28046 Madrid
Tel: (34) 915 161200; Fax: (34) 9151 61616

Representative Offices
The Bank of New York Mellon
José Abascal 45, Plta. 4
280030 Madrid
Tel: (34) 91 177 5120; Fax: (34) 91319 2247

Brickell Bank
Velazquez 94, 2ª.
28006 Madrid
Tel: (34) 91400 5009; Fax: (34) 91 400 5072 

Spanish Correspondents

Banco Bilbao Vizcaya Argentaria (BBVA)
International Department
Calle Azul, 4
28050 Madrid
Tel: (34) 91-374-3000; Fax: (34) 91-374-7197

Banco Santander
Central International Division
Ciudad Grupo Santander
Calle Partenón
Boadilla del Monte
28660 Madrid
Tel: (34) 91-289 4866

Caixa Bank
Avda. Diagonal, 621-629
08028 Barcelona
Tel: (34) 93-404-7110; Fax: (34) 93-330-0097

Bankia, S.A.
Paseo de la Castellana 189
28046 Madrid
Tel: (34) 91 391 5380/Fax: (34) 91 391 5414