The Spanish financial crisis was a crisis of saving banks. In 2007, these institutions had a market share of around 50% of the total system. Saving banks had been set up by Foundations in the XIX and XX centuries and did not have a clear owner who could control management. “When nobody owns, nobody cares”.
It was a crisis of insolvency, perceived and initially treated as one of liquidity, as often happens worldwide.
The crisis proved to be a systemic and extremely deep one, which ended up affecting the liquidity of the whole system.
The Spanish crisis was favored by monetary expansion and low interest rates, which made banks – and supervisors – loose the sense of risk.It was triggered in 2007 by the international subprime crisis, which lead to a credit crunch worldwide. But the real cause of the Spanish crisis was poor management, particularly focused on huge risk concentration in real estate and mortgages. Poor management was, in its turn,favored by political interference, which materialized through boards and managers appointed by regional governments, as allowed by the legislation on saving banks enacted in 1985.