Spain: Money for Manana

Spain's burro-paced economy has started to gallop. Industrial output has nearly doubled in the past five years. By 1975, the country's gross national product is expected to reach $30 billion, almost twice its current $16.6 billion. As one of Europe's potential-growth speedsters, Spain has naturally attracted sizable inflows of foreign capital, which the government has welcomed. But inevitably the main job of financing Spanish business expansion must come from within the country.

Last week two of Spain's Big Five banks planned a merger that would help gear Spanish banking to the heavy demands ahead. It would meld Spain's biggest commercial bank, the Banco Hispano Americano (capitalization $19.6 million, reserves $47.2 million), with the Banco Central (capitalization $13.3 million, reserves $33.3 million). With these combined resources and 805 branches, the new bank would rank sixth in Europe.

The merger is a major move toward the updating of Spain's banking structure, which has been one of Europe's most conservative and most internally powerful. In 1964, major Spanish banks held control of 1,008 enterprises that represent 49% of all the capital of Spanish corporations. This heavy control was long exercised in a conservative way, but more liberal lending policies are now helping Spain's newer industries. Since 1962, long-term private investment has risen from $150 million to more than $300 million yearly.

With only 2,800 bank branches (one for every 11,000 inhabitants), Spain lags behind most of Western Europe. The annual income of only $490 per capita has created little need for bank accounts. As Spain prospers, however, real income is expected to increase at least 50% in the next decade. The growth prospects have already attracted several American banks into joint ventures with Spanish banks. First National City Bank and Bank of America, for example, have set up respective fifty-fifty arrangements with the Banco de Vizcaya and the Banco de Santander.