The economic growth experienced in Spain in recent years has brought the economy a degree of maturity in terms of income and has provided the driving force required by the financial market.
The region of Madrid has profited from this favourable environment. This positive effect is determined by the strength shown by the financial services industry in recent years, which has not only been reflected by a greater increase in financial assets than leading financial centres in other cities, but has also led to a gradual strengthening of Spanish banks. Containment of costs in a business model focused on retail banking services and a regulatory model noted for its prudence have been of great importance to the financial system in the region of Madrid.
Closer examination
In particular, the equity and fixed-income securities markets require a closer examination. The equity securities market has shown great dynamism, allowing the region’s market capitalisation to grow at a yearly rate of 20% and its trading volume to grow by 29% between 2003 and 2007. This growth, which is similar to that of the Asian economies, has enabled Madrid to reduce the gap with Frankfurt and Paris in terms of capitalisation. Based on the data available at December 2007, the trading volume of the Madrid Stock Exchange is higher than that of Paris.
The situation of the fixed-income market is even more significant, with 51% annual growth in the period from 2003 to 2007, making Madrid the leading exchange in the world in terms of fixed-income trading volume – in spite of the fact that fewer securitisation deals have taken place since September 2007, mainly due to the international economic situation.
Companies located in the region of Madrid handle a business volume on a par with that of the most important regions in the world. Corporate governance in Spain has also witnessed a number of reforms, which have brought in practices that are consolidated and highly valued internationally.
The region also provides state-of-the-art business schools, which deliver highly qualified individuals to an increasingly demanding market. Moreover, Madrid is a well-known destination for tourism due to its leisure offering, gastronomy, climate conditions, as well as modern and widely accessible physical infrastructure. According to a recent survey by Deloitte, Madrid is today the third largest financial centre in Europe after London and Paris.IN A NUTSHELL
- Madrid is the decision-making centre for two of the world’s 30 leading banks and is a key gateway to Latin America.
- The banks located in the region of Madrid have demonstrated their leadership in terms of cost-to-income and shown their strength in international markets;
- The Madrid Stock Exchange has the third largest equities market at European level and led the fixed-income trading volume ranking in 2007.
Equity trading volume in Spain (Thousands of millions of euros)Source: World Federation of Exchanges, European Central Bank
