The Spanish Banking System:
We shall only concern ourselves here with commercial banks (both Spanish and foreign-registered), and savings banks (which can offer almost all of the services of a commercial bank), both of which we shall here call "banks".

There is a great number of banks in Spain and since April 1994, any European Union bank can open branch offices in Spain with little bureaucratic formality. You should not suffer from lack of choices. The Ministry of Finance (Hacienda) oversees the Spanish financial system in general, and the Banco de España is its instrument of monetary policy as well as the direct overseer of the banks.

Types of Accounts:
Fiscal residents in Spain can have a current account and savings account for residents. Non residents can only have the current and savings accounts for non residents. To open a bank account in Spain you will only need your passport or residence permit, and will be asked to fill out a form by the bank which will also set forth the bank's general terms and conditions.
You will also be asked for your N.I.E. number which can be obtained at your nearest police station with a foreigners department. A current account (cuenta corriente) usually carries a very low interest rate, if any. You can ask for a check book. A fix deposit account (cuenta de imposición a plazo) will give you interest depending on the time period of the deposit and the amount deposited. Banks can be bargained with about these conditions!
A savings book account (libreta de ahorro) also carries a low interest rate, but does give you a continuous written record of your account, and in some cases can be used in cash machines for withdrawing money.

The bank is obliged to retain 18% of the interest you earn, but not on a fix deposit by a non resident. The bank should also prepare a statement giving your average balance for the year, to be used in your Wealth Tax Declaration if you need to make one.

Transfers of Funds:
There are now no restrictions on transferring funds to and from Spain from other countries of the European Union and the EES. If you want to make Currency Transactions or transfers to or from countries outside the Community area, consult your Spanish bank. However, if you want to take out more than 13.253 Euro from Spain to another country, or move more than 80.000 Euro within Spain, you are obliged to make a communication to the authorities. Follow this link for a Currency Converter. Some banks are still charging heavy commissions on transfers of pensions from abroad, Other banks do not charge on such transfer. It pays to find out the conditions offered by the different financial institutions. The EU has decided to eliminate the commissions when using cash machines outside your own country, but inside the community area.

The cheque in Spain:
Write cheques only in ball point pen or ink (never in pencil or typewriter with erasable ribbon!).
Write (or accept) a cheque to the person/business that is to receive payment, and not to "al Portador" (bearer).
To ensure that a cheque can only be deposited to the account of the person or business to which it is made, write "a abonar en cuenta" (to be credited to the account of) before the name of the recipient, or cross the front of the cheque with two parallel lines.
Do not leave spaces which may be used for increasing the amount.
Guard blank cheques, destroy excess cheques, and never leave a blank signed cheque with anyone.
Writing a cheque without funds in the bank is illegal.

Bank Statements:
Most banks are willing to send your statement to any address you specify, in Spain or in your home country. The identifying number is the same as that on your cheques, with the first four digits giving the bank's number, the next four digits the branch number, then two control numbers and the last ten digits are your account number. Banks recommend that you use this entire number to avoid any confusion.

Other items are as follows:
"Fecha del extracto" = date of the statement
"Hoja" = page number
"Saldo actual" = current balance
The column headed:
"Fecha" = gives the date of each transaction
"Oficina" = the identifying number of the transacting bank
"Concepto" = a word or code for the transaction (sometimes very cryptic, and sometimes explained on the back)
"Valor" = the date when a deposit will start receiving interest
"Importe" = the amount involved in the transaction
"Saldo" = balance after each transaction

Other Bank Services:
Standing Orders (domiciliación)
You can order the bank to regularly pay certain bills when they come due - local taxes, garbage collection, electricity, water, phone, subscription to FIPE - by filling in a form supplied by the bank or the business billing you. Both the bank and the billing business must be informed of this standing order.
You must make sure that you have sufficient funds to pay such standing orders or you may arrive at your home to find essential services shut off for lack of payment (often requiring a reconnection fee!). Banks have been known to make mistakes resulting in the same unpleasantness!
Do not expect to get anything free from the bank. Ask for their list of fees for various transactions (which must be approved by the Banco de España).

The Bank Certificate:
It used to be obligatory for a foreigner to present a Bank Certificate if the money to buy a house came from outside Spain so that, under the then current control laws, you could take the money out of Spain if you wanted to. This is no longer necessary. But a foreigner applying for a residence permit as a retired person must get a certificate from the Spanish bank to the effect that he recieves regular pension payments from abroad.

Spanish Mortgages (Hipotecas)
A resident or non-resident foreigner may take out a mortgage in Spain, including on State-subsidized housing ("VPO" or Vivienda de Protección Oficial).
You may use a Spanish or a foreign mortgage holder, and the mortgage may be in Euro or a foreign currency.
A resident may finance up to the totality of the value of a property and over a longer period as a non-resident.
Interests on mortgages in Spain are low. Variable interest mortgages can be had at 3-4% per annum, and fixed interest mortgages from 5-7%.
If you want to take a mortgage with variable interest, the best reference
for the variations is the I.R.M.H. (Indice de Referencia del Mercado Hipotecario) published by the Banco de España.