Banking Law and Multinational Banking Groups in Spain

1. Introduction

A multinational banking group is a banking group whose parent, subsidiaries, branches or other regulated entities operate in more than one country.

Spain is particularly important in this area because major Spanish banking groups have substantial international operations. A Spanish banking group can therefore be subject simultaneously to:

Spanish banking legislation;

European Union prudential rules;

European Central Bank (ECB) supervision;

Banco de España supervision;

host-state banking regulation;

consolidated capital requirements;

recovery and resolution rules;

anti-money-laundering requirements;

corporate-governance requirements; and

cross-border information-sharing arrangements.

The key legal principle is that a multinational group is not treated simply as a collection of independent subsidiaries for prudential purposes. Consolidated supervision seeks to assess the financial strength and risks of the group as a whole.

Spanish legislation expressly provides for consolidated supervision of qualifying banking groups. Under Royal Decree 84/2015, Banco de España has responsibility for consolidated supervision in specified circumstances, including groups in which the relevant Spanish entity falls within the supervisory allocation rules.

2. Principal Legal Framework

The Spanish framework has several layers.

Spanish Law

The principal domestic banking statute is:

Law 10/2014 of 26 June on the organisation, supervision and solvency of credit institutions.

It is developed by Royal Decree 84/2015.

EU Prudential Law

Spanish banks are also subject to the directly applicable Capital Requirements Regulation (CRR) and other EU banking legislation.

Single Supervisory Mechanism

Significant Spanish banks fall within the ECB's direct prudential supervision under the Single Supervisory Mechanism (SSM).

The ECB's supervisory list has included major Spanish groups such as BBVA and Banco Sabadell, reflecting their status as significant institutions.

Resolution Law

Bank recovery and resolution is governed principally by EU and Spanish implementation of the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism (SRM).

These rules became especially important after the resolution of Banco Popular in 2017.

3. What Is Consolidated Supervision?

Consolidated supervision means that regulators examine the financial position and risks of a banking group on a group-wide basis.

For example:

Spanish parent
↓
Spanish bank
↓
Brazilian subsidiary
↓
Mexican subsidiary
↓
Portuguese subsidiary

A purely entity-by-entity approach could fail to identify risks created by the group's overall structure.

Consolidated supervision instead considers matters such as:

group capital;

liquidity;

leverage;

large exposures;

intra-group transactions;

governance;

risk concentration;

related-party transactions;

operational risk;

market risk; and

contagion between subsidiaries.

Spanish law expressly provides for consolidated supervision of qualifying groups.

4. International Subsidiaries

A Spanish banking group may own foreign subsidiaries that are separately incorporated under the law of another country.

The subsidiary may therefore have:

its own legal personality;

its own licence;

local directors;

local capital requirements;

local customers; and

local regulatory obligations.

Nevertheless, the subsidiary may form part of the consolidated prudential group.

This creates a dual legal relationship:

entity-level supervision

and

group-level supervision.

The foreign subsidiary remains subject to its host country's law while its activities may also affect the consolidated prudential position of the Spanish group.

5. Foreign Branches

A branch is legally different from a separately incorporated subsidiary.

A Spanish bank establishing a branch in another EU Member State may benefit from EU passporting arrangements and home-state supervision.

A branch outside the EU will generally be subject to the regulatory framework of the host jurisdiction as well as relevant requirements imposed upon the Spanish parent.

This distinction becomes important during:

insolvency;

resolution;

liquidity crises;

regulatory investigations;

customer disputes; and

transfer of assets.

6. ECB and Banco de España

The division of supervisory responsibility is a fundamental feature of Spanish multinational banking.

For significant institutions within the SSM, the ECB exercises direct prudential supervision.

Banco de España remains an important national competent authority and participates in the SSM supervisory architecture.

For less significant institutions, national supervision generally remains more prominent, subject to the ECB's overarching powers under the SSM framework.

This creates a coordinated system rather than a completely separate Spanish and European regulatory structure.

7. Group-Level Capital

One of the most important reasons for consolidated supervision is capital adequacy.

A multinational banking group can appear adequately capitalized when each entity is examined separately while the group has significant concentrated exposures.

Consolidated capital rules attempt to identify the group's overall position.

Relevant issues include:

Common Equity Tier 1;

Additional Tier 1;

Tier 2;

risk-weighted assets;

leverage;

capital buffers;

deductions;

intra-group exposures; and

capital requirements imposed following supervisory review.

The older Spanish framework already required consolidation and consolidated prudential supervision for qualifying banking groups.

The modern system has been substantially integrated with the directly applicable EU prudential framework.

8. Intra-Group Transactions

Multinational banking groups frequently transfer money, liquidity and services between subsidiaries.

Examples include:

Spanish parent → foreign subsidiary

or:

Foreign subsidiary → Spanish parent.

These transactions may be commercially legitimate.

However, excessive intra-group dependence can create contagion.

If one subsidiary suffers a major loss, another group company may become exposed through:

loans;

guarantees;

liquidity arrangements;

derivatives;

shared funding;

service agreements; or

other intra-group contracts.

Consolidated supervision therefore examines intra-group relationships as part of the group's risk profile.

The Spanish financial-conglomerate regime expressly identifies intra-group operations and risk-management procedures as important components of additional supervision.

9. Financial Conglomerates

Some multinational groups operate across several financial sectors.

For example:

Banking + insurance + investment services

Such a structure may constitute a financial conglomerate.

Spain's Law 5/2005 provides an additional supervisory framework for financial conglomerates.

Its purpose includes supervision of:

solvency;

capital adequacy;

risk concentration;

intra-group transactions;

risk-management procedures; and

internal controls.

This is particularly important for multinational groups whose activities cannot be understood by looking exclusively at their banking subsidiaries.

10. Third-Country Banking Groups

A particularly difficult issue arises where a Spanish bank is controlled by a parent located outside the European Union.

Spanish legislation provides mechanisms for examining whether the third-country parent is subject to equivalent consolidated supervision.

Royal Decree 1332/2005, for example, provides that where a Spanish credit institution has a non-EU foreign financial parent, Banco de España must examine whether equivalent consolidated supervision exists in the third country. If equivalent supervision is not present, Spanish authorities may apply alternative consolidated-supervision methods, including requiring an EU-based financial holding structure in appropriate circumstances.

This prevents a regulatory gap merely because ownership crosses EU borders.

11. Governance of Multinational Groups

Group governance creates additional legal responsibilities.

The parent company must have sufficient information about material risks arising throughout the group.

Governance questions include:

Who approves group risk policy?

Who monitors foreign subsidiaries?

How are material risks escalated?

Does the parent receive accurate information?

Are local boards sufficiently independent?

How are conflicts of interest managed?

Who oversees intra-group transactions?

How are cybersecurity incidents reported?

A multinational bank therefore needs governance arrangements capable of operating across different jurisdictions.

12. Risk Management

A multinational banking group generally needs group-wide frameworks covering:

Credit Risk

Risks from borrowers across different countries.

Market Risk

Foreign-exchange, interest-rate and securities-market exposures.

Liquidity Risk

The ability of the group and its subsidiaries to meet obligations.

Operational Risk

Failures involving processes, people, systems or external events.

Legal Risk

Differences between jurisdictions can produce conflicting legal obligations.

Compliance Risk

A transaction permitted in one country may be restricted in another.

Country Risk

Political, economic and regulatory developments in host jurisdictions may affect subsidiaries.

13. Cross-Border AML/CFT

Anti-money-laundering controls are particularly important in multinational groups.

A Spanish banking group operating across several countries may have customers and transactions moving between:

Spain
→ Latin America
→ Europe
→ Middle East
→ Asia.

The group needs procedures for identifying unusual transactions and ensuring that subsidiaries meet both local and applicable group-level requirements.

However, local privacy and banking-secrecy laws can complicate the transfer of customer information between group entities.

The bank must therefore balance:

group-wide compliance

against

local data-protection and confidentiality requirements.

14. Data Protection

Multinational banking groups routinely transfer personal data between countries.

Examples include:

customer information;

employee information;

transaction data;

fraud information;

credit information; and

compliance records.

Within the EU, the GDPR provides the principal data-protection framework.

Transfers to non-EU countries require appropriate legal mechanisms where the GDPR applies.

This creates an important practical problem:

A group may need to share customer information internationally for AML or fraud prevention while simultaneously ensuring that the transfer complies with data-protection law.

15. Resolution Planning

Multinational banking groups must also consider what happens if the group experiences serious financial distress.

Recovery and resolution planning asks:

Can the group recover?

If recovery fails:

Can the authorities resolve the bank without uncontrolled systemic disruption?

Resolution planning may involve:

loss-absorbing capacity;

minimum requirements for own funds and eligible liabilities;

group resolution structures;

separability of subsidiaries;

critical functions;

operational continuity;

liquidity during resolution; and

cross-border recognition of resolution measures.

The Banco Popular experience demonstrates how European resolution law can operate directly upon a Spanish banking institution.

16. Case Law: Banco Popular

The most important modern body of case law concerning a Spanish multinational banking group is connected with Banco Popular Español and its acquisition by Banco Santander.

On 7 June 2017, Banco Popular was placed into resolution under the EU Single Resolution Mechanism. Its shares were written down, certain capital instruments were converted, and those instruments ultimately became shares transferred to Banco Santander.

In 2018, Banco Santander became the universal successor to Banco Popular.

This generated extensive litigation before the EU courts and Spanish courts.

17. Case 1 — Fundación Tatiana Pérez de Guzmán el Bueno v SRB, T-481/17

General Court, 1 June 2022, T-481/17.

This case challenged the Banco Popular resolution scheme.

The General Court upheld the resolution scheme against the challenges brought before it.

The Court's judgment is important because Banco Popular was a Spanish credit institution under direct ECB prudential supervision and its resolution occurred under the EU's Single Resolution Mechanism.

Importance for Multinational Banking Groups

The case demonstrates that a Spanish bank can simultaneously fall within:

Spanish banking regulation;

ECB prudential supervision;

SRB resolution powers;

European Commission involvement; and

judicial review by EU courts.

This is the practical reality of multinational and European banking regulation.

18. Case 2 — Del Valle Ruiz and Others v Commission and SRB, T-510/17

General Court, Banco Popular litigation.

This litigation concerned challenges brought by former shareholders and investors following the resolution.

The Banco Popular resolution involved a cross-border European regulatory structure rather than a purely Spanish administrative process.

The General Court's 2022 judgment rejected the challenge to the resolution measures.

Importance

The case illustrates the consequences of the EU Banking Union for Spanish banks.

A major Spanish bank can be supervised and resolved through European institutions where the relevant legal conditions are met.

19. Case 3 — Aeris Invest v Commission and SRB, T-628/17

General Court, 1 June 2022.

Aeris Invest was among the parties challenging the Banco Popular resolution.

The General Court dismissed the challenge to the resolution scheme.

The case is relevant to multinational banking law because Banco Popular's resolution involved the interaction of:

ECB → SRB → European Commission → Spanish banking institution → Banco Santander.

The litigation demonstrates the complexity of regulatory responsibility within the Banking Union.

20. Case 4 — Aeris Invest v ECB, T-827/17

General Court, 6 October 2021.

This case concerned access to documents relating to the Banco Popular resolution.

The General Court examined the ECB's refusal to disclose certain documents and the exceptions protecting confidential supervisory and financial information.

The judgment recognized the importance of confidentiality in financial supervision while also examining whether the ECB had properly applied the applicable access-to-documents rules.

Importance

For multinational groups, supervisory confidentiality is particularly important because regulators receive highly sensitive information about:

subsidiaries;

capital;

liquidity;

business plans;

risk models; and

supervisory weaknesses.

The case demonstrates the legal tension between transparency and protection of supervisory information.

21. Case 5 — Aeris Invest v ECB, C-782/21 P

The matter subsequently reached the Court of Justice.

C-782/21 P, Aeris Invest v ECB, concerned access to documents relating to Banco Popular's resolution.

The Court of Justice delivered judgment on 27 April 2023.

The proceedings concerned the interpretation of the right of access to documents under the EU legal framework and the confidentiality of information associated with banking supervision and resolution.

Importance

This case is relevant because multinational banks generate information that moves between:

banks;

national supervisors;

ECB;

resolution authorities; and

EU institutions.

Legal confidentiality must therefore operate across institutional and national boundaries.

22. Case 6 — Del Valle Ruíz and Others v SRB, T-302/20

General Court, 22 November 2023, T-302/20.

The applicants sought compensation following the Banco Popular resolution.

The Court examined matters including:

shareholders' and creditors' rights;

right to property;

right to be heard;

effective judicial protection; and

the valuation used to determine whether compensation was due.

Importance

The case demonstrates that resolution of a multinational or systemically important banking institution must still respect fundamental procedural and property rights.

Resolution powers are extensive, but they remain subject to judicial review.

23. Case 7 — Banco Santander, C-687/23

This is one of the most significant recent cases.

Court of Justice, 11 September 2025, C-687/23, Banco Santander (Resolution of Banco Popular III).

The case arose from a Spanish Supreme Court reference concerning claims against Banco Santander following the resolution of Banco Popular.

The Court examined whether rights arising from actions for nullity or damages brought before Banco Popular's resolution could remain enforceable against Banco Santander as successor.

The Court distinguished actions brought before resolution from claims arising after resolution and considered the effect of the BRRD's rules on shareholder and creditor rights.

Importance

This case is especially important for multinational banking groups because a corporate successor may inherit significant legal relationships following a resolution transaction.

It demonstrates that acquisition through resolution does not necessarily mean that every pre-existing legal claim disappears.

24. Case 8 — Banco Santander v ECB, T-610/24

A very recent proceeding concerns Banco Santander v ECB, T-610/24.

Banco Santander challenged an ECB supervisory decision concerning the prudential treatment, on a consolidated basis, of deferred tax assets originating in Banco Santander (Brasil), S.A. and incorporated into Banco Santander, S.A.'s consolidated position.

The case demonstrates exactly why consolidated supervision matters.

A regulatory treatment applied to a foreign subsidiary can affect the prudential position of the Spanish parent.

As of 2026, the proceeding has also generated an appeal concerning the admissibility of the action.

25. Consolidated Supervision and Foreign Subsidiaries

The Santander/ECB litigation is a particularly useful illustration.

Suppose:

Spanish parent

owns

Brazilian banking subsidiary.

The subsidiary is regulated in Brazil.

But if the Spanish parent is subject to ECB consolidated supervision, treatment of the subsidiary's assets can affect the parent's consolidated prudential position.

Therefore:

foreign subsidiary regulation

and

Spanish group prudential supervision

operate simultaneously.

This is one of the defining features of multinational banking law.

26. Cross-Border Acquisition of Banks

Spanish banking groups can also acquire significant interests in foreign credit institutions.

Such transactions can require regulatory approval.

The ECB has expressly addressed the supervisory treatment of significant holdings acquired by Spanish credit institutions in third-country banks.

A notable example concerns BBVA's proposed increase in its stake in Garanti, a Turkish credit institution. ECB material explains that the Spanish legal framework requires approval for certain significant acquisitions in third-country credit institutions and that, within the SSM, the ECB exercises the relevant supervisory competence for BBVA.

This illustrates that multinational expansion is not merely a corporate transaction.

It is also a prudential-supervision event.

27. Case-Law Principle: Group-Wide Prudential Treatment

The Banco Santander/ECB litigation demonstrates an important principle:

A bank's consolidated prudential position can depend upon the regulatory treatment of assets, liabilities or activities located in another country.

The legal question may therefore concern:

“What happened inside the foreign subsidiary?”

but the regulatory consequence may concern:

“What capital position does the Spanish parent have?”

This is why consolidated supervision exists.

28. Case-Law Principle: Resolution Successors

Banco Santander's succession to Banco Popular illustrates another important rule.

When a failing bank is resolved through a transfer of business or similar resolution tool, the legal consequences for shareholders, creditors and existing claims are governed by the EU resolution framework.

The Court of Justice's 2025 judgment confirms that the timing of a claim can be decisive. Claims brought before resolution can receive different treatment from claims initiated after resolution.

29. Case-Law Principle: Confidential Supervisory Information

The Aeris Invest cases demonstrate that supervisory information receives substantial protection.

This is important for multinational banks because supervisors need access to sensitive information without creating unnecessary market instability or allowing competitors to obtain confidential information.

At the same time, confidentiality is not an unlimited exemption from judicial scrutiny or access-to-documents requirements.

The courts can examine whether an institution correctly relied upon the relevant confidentiality exceptions.

30. Cross-Border Crisis Management

A multinational bank creates a potential contagion channel.

For example:

Spanish parent
↓
foreign subsidiary
↓
large foreign-market loss
↓
capital pressure
↓
reduction in parent-group capital

Alternatively:

Spanish parent
↓
liquidity support
↓
foreign subsidiary
↓
parent's liquidity position deteriorates.

Group supervision and resolution planning are intended to identify these channels before a crisis becomes unmanageable.

31. Recovery and Resolution Planning

A multinational group must consider whether critical services can continue during a crisis.

Important services may include:

payment processing;

deposits;

lending;

treasury;

technology;

cybersecurity;

customer-data systems; and

settlement operations.

A subsidiary in another country may provide a service essential to the Spanish parent.

Consequently, resolution planning must consider operational interdependence, not simply legal ownership.

32. Ring-Fencing by Host States

A host-country regulator may have concerns that assets or liquidity will leave the host country during a crisis.

It may therefore seek to protect local depositors or local financial stability.

This creates tension between:

group-wide capital/liquidity management

and

host-state financial stability.

Multinational banking law therefore depends heavily upon cooperation between home and host supervisors.

33. Supervisory Colleges

Where several supervisory authorities are involved, regulatory cooperation becomes necessary.

Supervisory colleges allow relevant authorities to exchange information and coordinate supervisory activity.

The Spanish framework historically incorporated mechanisms for cooperation between different supervisory bodies in consolidated groups.

The modern EU framework has substantially expanded this cooperative architecture.

34. Large Exposure and Concentration Risk

A multinational banking group may be exposed to the same country, industry or corporate group through several subsidiaries.

For example:

Spanish subsidiary → €500m exposure
Brazilian subsidiary → €300m exposure
Mexican subsidiary → €200m exposure

Viewed individually, each exposure may appear acceptable.

Viewed collectively, the group may have a significant concentration.

Consolidated supervision helps regulators identify this type of group-wide concentration.

35. Capital Fungibility

A further issue is capital fungibility.

A Spanish parent may have substantial capital on a consolidated basis.

That does not necessarily mean all of that capital can immediately be transferred to a foreign subsidiary.

Local law may restrict:

dividends;

capital transfers;

related-party loans;

distributions; or

movement of liquidity.

Therefore, consolidated capital strength and actual availability of capital at subsidiary level are not necessarily identical.

This distinction is particularly important during financial stress.

36. Multinational Banking and Consumer Protection

Cross-border groups can also create consumer-law issues.

A customer may enter into a banking relationship with:

Spanish parent

while the service is technically delivered by:

foreign subsidiary or branch.

The applicable law may depend upon:

contractual structure;

customer residence;

location of service;

EU consumer legislation;

local banking law; and

conflict-of-law rules.

Therefore, multinational banking litigation often requires analysis of both prudential banking law and private international law.

37. Multinational Banking and Competition Law

Large banking groups may also create competition-law concerns.

Issues can arise from:

mergers;

acquisitions;

information exchange;

exclusivity;

payment systems;

market concentration; and

access to financial infrastructure.

A multinational banking acquisition may consequently require both:

prudential regulatory approval

and, where applicable,

competition-law review.

These are separate legal processes.

38. Risk of Regulatory Arbitrage

Multinational groups may operate in several jurisdictions with different regulatory standards.

This creates the possibility of regulatory arbitrage.

A group could theoretically attempt to place particular activities in jurisdictions where regulatory requirements are less restrictive.

Consolidated supervision seeks to reduce this risk by ensuring that material group risks remain visible to the competent supervisor.

Spanish legislation's treatment of foreign subsidiaries and third-country groups reflects this concern.

39. Practical Compliance Framework

A Spanish multinational banking group should therefore maintain:

1. Group Governance

Clear allocation of responsibilities between parent and subsidiaries.

2. Consolidated Risk Management

A group-wide view of material risks.

3. Capital Planning

Assessment of both consolidated and entity-level capital.

4. Liquidity Management

Monitoring of cross-border liquidity dependencies.

5. Intra-Group Controls

Controls over loans, guarantees and service arrangements.

6. AML/CFT Controls

Consistent minimum standards with local-law adaptations.

7. Data Governance

Legally compliant cross-border information sharing.

8. Recovery Planning

Clear plans for responding to financial distress.

9. Resolution Planning

Identification of critical functions and group dependencies.

10. Regulatory Reporting

Accurate reporting to the appropriate home and host supervisors.

40. Important Case-Law Summary

41. Overall Legal Structure

The Spanish multinational banking model can be summarized as:

Spanish banking law

↓

EU prudential regulation

↓

ECB / SSM supervision

↓

Banco de España

↓

Consolidated group supervision

↓

Foreign subsidiaries and branches

↓

Host-country regulation

↓

Cross-border supervisory cooperation

↓

Recovery and resolution framework

This structure prevents a multinational bank from being viewed exclusively through the law of the country where its parent company is incorporated.

42. Conclusion

Multinational banking groups in Spain operate within a multi-level regulatory system combining Spanish law, EU prudential regulation, ECB supervision, Banco de España responsibilities and host-state regulation.

Spanish law expressly provides for consolidated supervision of qualifying banking groups. Royal Decree 84/2015 assigns Banco de España consolidated supervisory responsibilities in specified circumstances, while the EU's SSM gives the ECB direct responsibility for significant institutions.

The legal importance of group supervision is that financial risks do not necessarily remain inside the legal entity where they originate. A foreign subsidiary's losses, capital position, deferred-tax assets, liquidity needs or other exposures can affect the consolidated position of the Spanish parent. The current Banco Santander v ECB, T-610/24 litigation provides a direct example involving assets originating in Banco Santander's Brazilian subsidiary and their treatment at the Spanish parent level.

The Banco Popular litigation provides the clearest body of recent case law demonstrating how Spanish banking institutions interact with the European supervisory and resolution architecture. The General Court and Court of Justice have considered resolution powers, supervisory confidentiality, shareholders' rights, creditor protection and the legal consequences of Banco Santander's succession to Banco Popular.

The central principle is therefore:

A multinational banking group operating from Spain is regulated both as a collection of legally separate entities and, for prudential purposes, as an interconnected economic group. Consolidated supervision exists to identify risks that would be missed if regulators examined each subsidiary or branch in isolation.