1. Are Deposit Rates Controlled in Spain?

No. Free market principle.

• Art. 5 Ley 10/2014 Ordenación del Sector Bancario + Banco de España Circular 5/2012: Banks are free to set interest rates on deposits and loans.
• Obligation is transparency, not price: Must report rates to Banco de España for statistical purposes, and pre-contractual info under Orden EHA/2899/2011 - show AER, TAE. For Cliente Bancario portal: "Banks are free to set their own interest rates. However, for statistical purposes, they are obliged to inform Banco de España".
• No usury floor/ceiling on deposits: Ley de Usura 1908 applies only to lending at abusive rates, not to low deposit rates.

De facto control via ECB and market structure:
ECB Deposit Facility Rate: -0.50% in 2021 → 4.00% Sept 2023 → 3.00% end 2024 → 2.00% 2025. Spanish banks kept pass-through low:

ECB stats: Aug 2024, average remuneration on deposit accounts in Spain 2.31% vs 3.03% eurozone average. New deposits with agreed maturity corporations: 3.64% May 2024.

Banco de España Institutional Report 2024 notes balance sheet contracted 9% 2022-2023 due to TLTRO unwind, then ECB began cutting June 2024.

2. Why Competition Concerns?

Market concentration:

CNMC merger analysis on BBVA-Sabadell (2024-2025): If approved, 3 banks would control ∼70% of lending and deposit markets - CaixaBank, Santander, BBVA. CNMC identified threat to effective competition in retail banking where merged entity exceeds 30% combined market share in certain provinces, especially Catalonia.

CNMC 2025 Report on Deposit Remuneration: Found deposit rates significantly below euro area average, identified consumer inertia, switching costs, limited financial literacy as key factors constraining competitive discipline. Spanish savers keep money idle: Spaniards lose €35bn/year due to money in idle accounts, conservative mentality, ECB flooding liquidity meant banks didn't need retail funding.

Result - Windfall Profits: Retail banks benefit from rising rates with floating-rate mortgages (average mortgage 1.5% March 2022 → 3.7% July 2024) while keeping deposit costs under control. Bank of Spain warned 2023.

3. Regulatory Response - No Price Control, But Tax

Instead of controlling rates, Spain imposed windfall tax:

Law 38/2022 + extension Law 7/2024 (21 Nov 2024):

• Original: 4.8% levy on NII + net commissions exceeding €800m.
• New progressive from 2024: 1% up to €750m, 3.5% €750m-1.5bn, 4.8% €1.5-3bn, 6% €3-5bn, 7% over €5bn.
• Raised ~€3bn in 2 years. 2024 review found underpayment, banks face extra payments. Compatibility with EU law challenged - reference to OECD and investment law.

Funcas study: Excess reserves €110bn generating cost, but remuneration cost below eurozone average.

4. Case Laws - Competition

CASE 1: CNMC Derivatives Cartel - The 91 Million Annulment

CNMC Decision 13 Feb 2018, File S/DC/0579/16

CNMC fined CaixaBank €31.8m, Santander €23.9m, BBVA €19.8m, Sabadell €15.5m - total €91m. Allegation: Agreeing to set price above market conditions for interest rate derivatives used to hedge interest rate risk in syndicated loans for project finance.

National Court (Audiencia Nacional) Judgment 11 Jan 2024: Annulled all fines. Court found CNMC did not prove single and continuous infringement. Failed to demonstrate that offering derivatives under different conditions than agreed with customers was coordination.

Appeal pending: BBVA appeal to Supreme Court, as of GCR 2024.

Lesson for deposit pricing: CNMC must prove concerted practice, not just parallel behavior in low deposit rates.

CASE 2: CNMC Mortgage Signaling Probe - 2024-2025 Ongoing

CNMC investigates 6 largest banks: Santander, BBVA, CaixaBank, Sabadell, Bankinter, Unicaja

Not formal cartel, but concerted practice via public statements. Executives made public statements about future mortgage pricing strategies for fixed-rate products.

CNMC theory: Even without formal pact, public communications enabled banks to predict future conduct of rivals - violates Art.1 Ley de Defensa de Competencia and Art.101 TFEU (information exchange).

Status: Second-phase investigation. Potential fines €50m per bank. Banks entered formal dispute stating commentary on margins is not coordination.

This mirrors EU Austrian Banks "Lombard Club" case - 8 Austrian banks found guilty of fixing prices.

CASE 3: CNMC Hub & Spoke - Digital Platforms

Case S/0005/20 (2025) - Uber/Cabify/Bolt

Two taxi associations alleged platforms formed hub-and-spoke cartel setting uniform prices via algorithms. CNMC rejected - algorithmic pricing is ancillary and proportionate feature based on duration, distance, vehicle type, supply-demand.

Relevance: Same defense used by banks for deposit pricing algorithms - if all use similar ECB-based pricing models, not necessarily cartel.

CASE 4: CNMC Deposit Remuneration Report 2025 + Envelopes Damages

STS 2621/2025, 5 June 2025 - Envelopes Cartel: Supreme Court consolidates damages calculation - upheld flat 20% overcharge judicial estimation method based on CNMC decision. Establishes how private damages for financial cartel calculated.

Used as precedent to calculate damages if deposit cartel proven - could estimate overcharge to savers.

CNMC Report 2025: Not sanction, but identifies market failure - low financial literacy + switching costs = oligopolistic pricing power without explicit agreement. Recommends measures: account portability, financial education, debt advice per CCD2.

CASE 5: BBVA-Sabadell Merger Control

CNMC Second Phase Investigation 2024: Identified competition concerns in retail banking, SME lending, payment services. Required commitments: maintain branch presence, support vulnerable clients, client communication.

Shows regulatory tool: Instead of controlling deposit price, CNMC controls market structure to preserve competition.

5. What This Means for Compliance

If you are a bank or fintech in Spain:

1. You can set deposit rate freely, but must file with Banco de España and justify under transparency law. No floor.
2. Do not signal future pricing: Avoid public statements like "we will not increase deposit rates above X" or "market should keep remuneration low". CNMC treats as potential concerted practice.
3. Document independent pricing: Keep internal ALCO minutes showing independent cost of funds, ECB rate, liquidity buffer analysis.
4. Anticipate windfall tax: Provision for progressive tax up to 7%.
5. Prepare for CCD2 + account switching directive: EU pushing easier switching to increase competition.