Savings bank (Spain) - AbsoluteAstronomy.com

Spain

Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...

, a savings bank ( or informally just caja, , , informally 'caixa') is a financial institution

Financial institution

In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...

which specializes in accepting savings deposit

Deposit account

A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...

s and granting loan

Loan

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....

s. Their original aim was to create the habit of thrift amongst the very poor but they have evolved to compete with and rival commercial banks.

Their trade association

Trade association

A trade association, also known as an industry trade group, business association or sector association, is an organization founded and funded by businesses that operate in a specific industry...

is the Spanish Confederation of Savings Banks

Spanish Confederation of Savings Banks

Spanish savings banks developed a vertical alliance structured through a "central" savings bank or wholesaler of retail finance. This kind of institution dated to the early 20th century and was pioneered by Skopbank in Finland , Fellesbanken in Norway and ICCRI in Italy...

(Confederación Española de Cajas de Ahorro or CECA).

Emergence and growth

European countries which adopted the Scottish savings bank

Savings bank

A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.In Europe, savings banks originated in the 19th or sometimes even the 18th century. Their original objective was to provide easily accessible savings products to...

model early on were those in which traditional Protestant values of self-help and the ideas of Jeremy Bentham

Jeremy Bentham

Jeremy Bentham was an English jurist, philosopher, and legal and social reformer. He became a leading theorist in Anglo-American philosophy of law, and a political radical whose ideas influenced the development of welfarism...

and Thomas Malthus

Thomas Malthus

The Reverend Thomas Robert Malthus FRS was an English scholar, influential in political economy and demography. Malthus popularized the economic theory of rent....

were particularly influential. Such was not the case in Portugal

Portugal

Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...

and Spain

Spain

where savings banks started rather late (1836 and 1839, respectively) and followed the French model (established in 1818).

Regulation introduced in 1835 was the first to authorise the establishment of savings banks in Spain. This piece of legislation allowed the establishment of independent non-profit-orientated institutions which had to be financed by own resources. However, it was not clear how individual institutions would access these resources although there were loose references to the expectation that capital would be raised as the well-off supplied financial resources as charitable donations. The Spanish government clearly displayed a preference for initial investment to come from the private sector while individual institutions would provide for some form of guarantee to secure funds held in deposit. Financially, however, the model of 1835 was very weak. Hence, in 1839 a new piece of legislation introduced the "French model" where individual savings banks were linked with a "Mount of Piety".

Unlike the Scottish savings banks, French-style savings banks created an initial fund to cover set-up costs and unexpected losses through donations and setting up a charity. After this the banks became autonomous with a governing board of six to 20 principals (working pro bono) holding responsibility for the strategic direction and overall affairs of the banks. Both in Portugal and Spain the most common source of the set-up fund was the local Mount of Piety. These Mounts of Piety (a literal translation from "Montes de Piedad") were early modern charitable institutions where advances were made against some kind of collateral in pawn (usually, jewellery or clothes). Consequently, Spanish savings banks would accept low-value and low-volume savings in deposit and, in turn, place these funds in the ‘Mounts of Piety’ in order to make small loans to the more underprivileged classes.

Like their counterparts in Scotland

Scotland

Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

and France

France

The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

, Spanish savings banks briefly placed excess deposits at a government owned institution (Caja General de Consignaciones, 1852-1868). This portfolio strategy was part of a change in government policy looking for greater intervention in the business of Spanish savings banks as well as providing financial aid to the recently created Caja de Dépositos y Consignaciones. However, the change in strategy was short lived due to the poor quality of government bonds in the 19th century. Instead, Spanish savings banks increasingly used deposits exclusively to finance the activities of the ‘Mount of Piety’.

A turning point in the history of Spanish savings banks came after the restoration of the monarchy

Spain under the Restoration

The Restoration was the name given to the period that began on December 29, 1874 after the First Spanish Republic ended with the restoration of Alfonso XII to the throne after a coup d'état by Martinez Campos, and ended on April 14, 1931 with the proclamation of the Second Spanish Republic.After...

in 1874. Until then regulation and government policy around savings banks had closely followed the interventionist "French model". As was the case in Britain

United Kingdom of Great Britain and Ireland

The United Kingdom of Great Britain and Ireland was the formal name of the United Kingdom during the period when what is now the Republic of Ireland formed a part of it....

, this approach limited the operations of savings banks. Legislation introduced in 1880, opened the way for the growth of Spanish savings banks.

The Act of 1880 had clear objectives for the running of savings banks. At the same time, there were a number of areas which lacked precision in the new introduced regulation. However, it was the lack of precision in a number of areas which was to allow the growth and development of savings banks in Spain. In particular, freedom (i.e. lack of detailed regulation) regarding investment policies resulted in diversification and growth of assets at a greater rate than counterparts elsewhere in Europe

Europe

Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

. Indeed, from the time the Act of 1880 was published until the end of the 19th century, the number of entities doubled from 26 in 1880 to 66 in 1905; while the sum of cash and assets held as deposit increased by four percent from 12 per cent of total savings in Spain in 1880 to 16 percent in 1905.

Alongside the savings banks, in 1890 and following German ideas to promote agriculture, co-operative banks ("caja rurales") emerged in rural areas. Most of these banks were established in the countryside under the auspices of the syndicalist, co-operativist

Co-operative economics

Co-operative economics is a field of economics, socialist economics, co-operative studies, and political economy, which is concerned with co-operatives.-History:...

movements and the Catholic church. However, these intermediaries grew in size until after 1920. Their impact, number and asset size were always dwarfed when compared with the achievements of the savings banks and as a result, the "cajas rurales" were eventually absorbed by the savings banks.

Performance in the first half of the 20th Century

Between 1870 and 1900 the financial strength of savings banks increased significantly. During this period, the pawn and emergency loan operations of the Mount of Piety were unable to absorb all deposits made at the savings bank. Unlike what was a requirement at other European countries, Spanish savings banks were not required to purchase government debt with excess resources. Instead, savings banks began making short-term advances and issuing mortgages directly to the public. Initially they issued short-term loans using public and industrial goods in stock as collateral. Between 1862 and 1867, 40 per cent of the amount of the loans was granted with the clothing securities and the remaining 60 per cent was secured by stock. Diversification continued and by the outbreak of World War I

World War I

World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

, Spanish savings banks were readily issuing mortgages directly to retail customers. The Mortgage Act of 4 June 1908 contributed to the development of this phenomenon as it pioneered exemption from having to pay different forms of capital gains and corporation’s tax for mortgages issued by the Mount of Piety.

Most early-established savings banks had located in the biggest urban centres, and grew in financial strength through retained surpluses. By the turn of the century most assets were held in the savings banks located in seaports and industrial cities. Between 1900 and 1925 the number of Spanish savings banks tripled to 150 banks, although no major change in regulation policy or the banks' business portfolio had taken place.

Between 1900 and 1914 the Spanish banking sector experienced a sharp increase in its levels of activity. For some this period also observed increased efficiency and enhanced competitiveness. Assets of private commercial banks grew significantly due to two exceptional circumstances, namely the colonial crisis (the repatriation of capital) and World War I

World War I

in Europe (the growth of business activity under the protection of Spanish neutrality). These circumstances favoured the geographical expansion of the regional private commercial banks based Madrid

Madrid

Madrid is the capital and largest city of Spain. The population of the city is roughly 3.3 million and the entire population of the Madrid metropolitan area is calculated to be 6.271 million. It is the third largest city in the European Union, after London and Berlin, and its metropolitan...

and the Basque Country

Basque Country (autonomous community)

The Basque Country is an autonomous community of northern Spain. It includes the Basque provinces of Álava, Biscay and Gipuzkoa, also called Historical Territories....

throughout Spain.

In 1921 the first banking law was enacted and that year the Consejo Superior Bancario or CSB (High Banking Council) was established by private commercial banks. The role of the CSB was to co-ordinate the actions of private commercial banks as their economic power became more important. By the beginning of the Spanish Civil War

Spanish Civil War

The Spanish Civil WarAlso known as The Crusade among Nationalists, the Fourth Carlist War among Carlists, and The Rebellion or Uprising among Republicans. was a major conflict fought in Spain from 17 July 1936 to 1 April 1939...

(1936-1939), private commercial banks dominated financial markets, were organised through the cartel that built around the Consejo Superior Bancario and supervised by the Ministry of Employment, Commerce an Industry (and later on by the Ministry of Employment and Welfare).

During the 1920s assets in savings banks started to abandon their charitable nature and gradually turned into genuine financial intermediation institutions. Growth was limited because competitive pressure to find new opportunities within the private commercial banking sector resulted in a policy to expand the geographic scope of retail branches networks and diversify sources of business. These strategies brought the competitive challenge of private commercial banks to markets being serviced by savings banks.

Individual savings banks enhanced their profile within their local communities as greater asset size allowed them to increase the funding of social welfare- and agricultural projects (Obra Social, a practice that is nowadays part of their corporate social responsibility

Corporate social responsibility

Corporate social responsibility is a form of corporate self-regulation integrated into a business model...

). However, a new approach to how people saved and to the working environment of savings banks came about as a result of legislation enacted in 1926, 1929 and 1933 during the dictatorship of General Primo de Rivera

Primo de Rivera

Primo de Rivera is a Spanish family prominent in politics of the 19th and 20th centuries:*Fernando Primo de Rivera, Spanish politician and soldier, 1831-1921*Miguel Primo de Rivera , dictator of Spain from 23 September 1923 to 1930...

, a period in which the economic policy was marked by an authoritarian corporatism

Corporatism

Corporatism, also known as corporativism, is a system of economic, political, or social organization that involves association of the people of society into corporate groups, such as agricultural, business, ethnic, labor, military, patronage, or scientific affiliations, on the basis of common...

, and the Spanish Republic

Second Spanish Republic

The Second Spanish Republic was the government of Spain between April 14 1931, and its destruction by a military rebellion, led by General Francisco Franco....

brought. These regulatory changes brought to an end the savings banks charitable nature. They also turned their profits into the main source of funds (and therefore to support the "Obra Social"). Regulatory innovations put to an end the broad discretion that the previous regulation had given to the directors of savings banks and established specific and detailed guidelines whose use (and abuse) grew during the dictatorship of General Francisco Franco

Francisco Franco

Francisco Franco y Bahamonde was a Spanish general, dictator and head of state of Spain from October 1936 , and de facto regent of the nominally restored Kingdom of Spain from 1947 until his death in November, 1975...

Regulatory burden

The Franco regime (1939–1975), reaffirmed the pre-eminence of private commercial banks within the Spanish financial system and introduced regulation that handicapped traditional savings banks. The supervision of the savings banks was transferred from the Ministry of Interior to the Bank of Spain.

The context of the first of the episodes of regulatory change for the savings banks was characterised by the intensification of regulatory burdens and marked by the overwhelming majority of new savings banks that were established between 1939 and 1977, being set up by local and central governments (with some notable exceptions like the co-operativist Caja Laboral

Caja Laboral

Caja Laboral Popular Sociedad Cooperativa de Credito or Caja Laboral is a Spanish credit union established in 1959 as part of the Mondragon Corporation and headquartered in Mondragón, in the Basque Country of Spain...

). The Franco regime continued implementing a practice developed during the 1920s called the principle of territoriality

Principle of territoriality

The territorial principle is a principle of public international law under which sovereign state can prosecute criminal offences that are committed within their borders...

, meaning that the business of each savings bank was restricted to its home province

Province

A province is a territorial unit, almost always an administrative division, within a country or state.-Etymology:The English word "province" is attested since about 1330 and derives from the 13th-century Old French "province," which itself comes from the Latin word "provincia," which referred to...

. This principle remained an informal arrangement until it was enacted into law in 1964. At the same time, the increasing asset base of the savings banks prompted the Finance Ministry to start regulating the sources and applications of their funds. As a result, the Finance Ministry directed a growing proportion of the assets of savings banks to finance public debentures and private banks' short-term liabilities, with the added result that the policy significantly reduced funds available for agricultural projects and other traditional lending activities.

The context of the second regulatory change for the savings banks dates to the last stage of the Franco regime, when attempts were made to ease the regulatory burden on Spanish savings banks (particularly in 1962 and 1964). Nonetheless, until 1974 the savings banks remained outside the Spanish clearinghouse system and had access to only a restricted business portfolio. However, under the Fuentes Quintana Reform (1977), the competitive environments for savings and private banks started to converge. The reform gave savings banks strong incentives to modernise their infrastructure and develop new skills. In 1977, for example, the Bank of Spain authorised the first automated teller machine

Automated teller machine

An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...

for the savings banks and by 1996, their combined network had 14,169 machines or in a wider context, was the biggest network in Spain and the third largest in the world.

Sources

Aguilar Piñal, F. (1975). Los montepíos laicos en el siglo XVIII. Homenaje a Don Agustín Millares Carlo Vol. 1. J. Simón Díaz. Las Palmas.

Anton Ramirez, B. (1876). Montes de Piedad y Cajas de Ahorros. Reseña histórica y crítica. Madrid, Aribau y Cia.

Ash, N. (1987). Cajas Cash in by Concentration. Euromoney (Supplement). Sep.

Bátiz-Lazo, B. (2004). "Strategic Alliances and Competitive Edge: Insights from Spanish and UK Banking Histories." Business History 46(1): 23-56. http://ideas.repec.org/p/wpa/wuwpeh/0211003.html

Bátiz-Lazo, B. and Del Angel, G. (2003). "Competitive Collaboration and Market Contestability: Cases in Mexican and UK banking (1945-75)." Accounting, Business and Financial History 13(3): 1-30.http://ideas.repec.org/p/wpa/wuwpeh/0211004.html

Caballero Míguez, G. (2004). "De la jerarquía al mercado: la reforma financiera española desde la nueva economía institucional." Papeles de Economía Española 101.

Caminal, R., et al. (1990). Competition in Spanish Banking. European Banking in the 1990s. J. Dermine. Oxford.

Canals, J. (1994). Competitive Strategies in European Banking. Oxford.

Comín, F. (2003). "La Confederación Española de Cajas de Ahorros: asociación representativa, caja de cajas y proveedora de servicios (1928-2003)." Economistas 98: 36-45.

Comín, F. and Torres, E. (2005). "La confederación española de cajas de ahorro y el desarrollo de la red de servicios financieros de las cajas en el siglo XX." Papeles de Economía Española 105-106: 48-65.

Cuadras Morató, X., et al. (2002). "Productividad, competencia e innovación en la banca privada española, 1900-1914." Revista de Historia Económica 20(2).

Davies, B. (1987). Thinking Big for Small Savers: Interview with José Joaquín Sancho Dronda. Euromoney (Supplement). Sep.: 2.

de la Hucha, F. and Antón, J. A. (1991). "Situación actual de las cajas de ahorro europeas." Papeles de Economía Española 46.

Domenech, R. (1993). "Especialisación productiva y resultados de las cajas de ahorro españolas (1986-1991)." Papeles de Economía Española (Perspectivas del Sistema Financiero) 43.

Duet, D. (1983). Les Caisses d'Epargne francaises et leur acitivité. Tradition ou évolution (1818-1981). Paris, Presses Universitaires de France.

Fanjul, O. and Maravall, F. (1985). La eficiencia del sistema bancario español. Madrid.

Forniés Casals, J. F. (1991). "Interpretación básica de la historia de las cajas de ahorros españolas." Papeles de Economía Española 46.

Garcia Delgado, J. L. (1984). La Banca Privada: De la crísis colonial a la consolidación de los años veinte. Historia de España, Vol. 37. R. Menéndez Pidal and J. M. Jover Zamora. Madrid.

García Delgado, J. L. (1985). "Notas sobre el intervencionismo econòmico del primer franquismo." Revista de Historia Económica 1: 135-46.

Gonzalo Gonzalez, L. (1981). El tesoro público y la Caja General de Depósitos (1852-1868). Madrid, Instituto de Estudios Fiscales.

Grávalos, J. J. (1993). Una nueva estrategia para las cajas de ahorros: La fusión tecnológica. El sistema financiero español ante el Mercado Único. L. Fernández de la Buelga and I. Ezquiaga. Madrid.

Grimá i Terré, J. D. and von Löhneysen, E. (1991). "Nueva estructura organizativa para bancos y cajas universales." Papeles de Economía Española 49.

Gueslin, A. (1989). "L'invention des Caisses d'épargne en France: une grande utopie libérale." Revue Historique 57(2): 391-409.

López, R. (1993). Las cajas de ahorro en los noventa. El sistema financiero español ante el Mercado Único. L. Fernández de la Buelga and I. Ezquiaga. Madrid.

Maixé, J. C. (2005). "Cajas de ahorro y desarrollo regional. Aspectos diferenciales de los sistemas financieros gallego y asturiano." Papeles de Economía Española 105-6(254-273).

Maixé, J. C., et al. (2003). El ahorro de los Gallegos. Orígnes e historia de Caixa Galicia (1876-2002),. A Coruña, Fundación Caixa Galicia.

Martínez Soto, A. P. (2001). "La tela de araña. Mercados informales de financiación agraria, usura y crédito hipotecario en la región de Murcia (1850-1939)." Areas 21: 185-220.

Martínez Soto, A. P. (2003). "Las cajas de ahorros españolas en el siglo XIX. Los orígenes del sistema (1839-1875)." Papeles de Economía Española 97(174-204).

Maudos, J. (1991). El impacto del cambio tecnológico en el sistema bancario: el cajero automático. Intstituto Valenciano de Investigaciones Económicas (WP EC-91-10). Valencia.

Medel Cámara, B. (1991). "La reforma de la Confederación Española de Cajas de Ahorro." Papeles de Economía Española 46.

Montero, M. (1983). Bases para la investigación del préstamo y la usura en la sociedad del siglo XIX. Madrid, Confederación Española de Cajas de Ahorro.

Revell, J. (1991). "Consecuencias de los cambios recientes en las cajas de ahorro de Europa occidental." Papeles de Economía Española 46: 191.

Ros Pérez, F. (1996). Las cajas de ahorros en España: Evolución y regimen jurídico. Murcia, Fernando Ros Pèrez.

Sánchez Sáez, J. M. and Sastre de Miguel, T. (1995). ¿Es el tamaño un factor explicativo de las diferencias entre entidades bancarias? Servicio de Estudios Banco de España No. DT9512. Madrid.

Serrano, J. M. and Costas, A. (1990). La reforma del marco institucional. Economía de la transición y de la democracia. J. L. Garcia Delgado. Madrid: 505-25.

Tedde de Lorca, P. (1991). "La naturaleza de las cajas de ahorros: Sus raíces históricas." Papeles de Economía Española 46(5).

Tortella, G. (1974a). Las magnitudes monetarias y sus determinantes. La banca española en la Restauración (vol 1). G. Tortella. Madrid, Banco de España.

Tortella, G. (1974b). Una serie de cuentas de ahorro no bancarias 1874–1914. La banca española en la Restauración (vol 2). G. Tortella. Madrid, Banco de España: 541-46.

External links

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

Emergence and growth

Performance in the first half of the 20th Century

Regulatory burden

See also

Sources

External links