Muchos Bancos

When we met with a representative of Spain’s central bank - one of the topics we discussed was the overcapacity in the Spanish banking sector.

The low interest rates that Spain enjoyed over the past decade – a product of the policy steps.

Spain was required to make in order to join the Eurozone, in addition to a surge in foreign investment from abroad and changes to how the country’s financial industry was regulated, meant that banks competed fiercely to offer mortgages that fueled the country’s real estate boom. The signs of this overcapacity are easily visible on the streets.

As Federico Steinberg, senior fellow on international economy and trade at the Real Instituto Elcano told us: "Basically in this past 10 years, a lot of over capacity has been put into the system. The recent real estate boom led to a huge increase in the number of bank branches as a new branch was set up to accompany each new development.
This has led to huge overcapacity, we don't need that many branches of these small Cajas (small saving banks).

Spain has the most bank branches per 100 inhabitants anywhere in the world - it's amazing.

So you have a lot of over capacity, some of the branches are losing money, the banks are indebted to foreigners - they borrowed cheaply from German banks in order to finance real estate initiatives - so they have a lot of debt.

So, basically, what you need is to consolidate all these small banks in to fewer large banks that have more financial muscle and are able to go out and get finance if they need it."

However, despite the huge number of banks, finding an ATM that accepts a China UnionPay (CUP) card is still quite a task.

On arrival at Madrid airport, I discovered that none of the ATMs in the airport accept the card - forcing me to lug my bags to the other end of the terminal to exchange cash.

When I arrived at our hotel near the center of town late in the evening, I went out in search of a bank that accepted CUP cards and also a convenience store.

If you visit Shanghai or Seoul you’ll see a convenience store – either 711 or some local equivalent- every 500m or so, but in central Madrid there aren’t many convenience stores – but it seemed that every second building housed a bank.

But despite the huge number of banks, that night I still had to go back to the hotel empty handed as none of them would accept my CUP card.

In the morning I was finally able to locate a bank –La Caixia – from whose ATMs I could withdraw Euro using a China Union Pay Card.

Below is a gallery of the variety of banks we saw while in Madrid.