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The Spanish banking sector shares some of the challenges faced by European banking such as reduced interest rates, a high amount of unproductive assets or the need to keep on strengthening core resources. Nonetheless, the intense restructuring which has already been carried out to correct the imbalances of the past makes it worse off in some ways, although that does not imply that it should not make additional efforts to improve its profitability. The great challenge faced by Spanish and European banking is to improve profitability, which these days is below what investors demand and is therefore the cost of attracting capital. The latest available information shows that the Spanish banking sector is more profitable and efficient than the European average, but has lower levels of solvency. Specialisation by Spanish banking in the traditional activity of mediation explains the high weight that income from interest has on total income, which makes it vulnerable to the current environment of reduced interest rates. This vulnerability advises diversification of its business to increase the importance of income not based on interest. In addition, the high network density, together with the very reduced average size of its branches, forces it to go further in the adjustment of its installed capacity carried out so far, above all in the face of the accelerated rate of digitalisation of banking activity.

Maudos, J. (2017):”La situación actual del sector bancario español en el contexto europeo”, Mediterráneo Económico, 29, March, pp. 77-98.