To the best of my knowledge this is a vastly oversimplified but basically accurate description of the Spanish banking system. Essentially, in recent history, there have been three types of "bank".
The first is the standard commercial bank; the bank raises capital and then lends money to people and organisations in order to make a business profit. The second is the Caja de Ahorros, a Savings Bank where the money for loans came from the deposits of the savers. Many of the Savings Banks in Spain originally loaned money against pawned items. The profit from the operation is used to support loans to savers and a certain percentage is diverted to a charitable foundation to support "good causes." The third institution, the Rural Savings Bank, has syndicalist or co-operative roots and was originally developed to promote agriculture in rural areas.
At sometime in their history the Savings Banks were limited to operating within geographical boundaries so that the CajaMurcia, the "Murcia Savings Bank" operated in Murcia and the Caja de Ahorros del Mediterraneo or "Mediterranean Savings Bank" did business in Alicante and Murcia. As the legisltion was relaxed the Cajas began to operate further from home. Somewhere along the way regional politicians got involved in the running of the majority of the Savings Banks often because of the influence they wielded through the charitable foundation of the Caja.
So the history of the Cajas de Ahorro is a familiar story, similar to the UK Building Societies. Local Savings Banks merge to produce larger institutions which look, to anyone without specialist knowledge, almost exactly like banks though their names at least suggest some link to the locality.
There were tens of big and powerful Savings Banks when we first arrived here. Lots or maybe all of the Cajas ploughed money into what is now worthless land, overpriced houses and grandiose and redundant building projects. As the debt burden caught up with them and the regulatory authorities started to investigate the level of bungling, cronyism, mis-selling and straightforward theft started to emerge.
Recent legislation, the demands of Brussels and the European Bank have all helped to change the face of Spanish banking. Unfortunately the system we live in depends on the banks acting as the conduit between lenders and borrowers so we, the taxpayer we, have been forced to bail the bunglers and crooks out. I resent that and I would be very happy to see lots more of the fraudsters go to prison. Fat chance of that though - the old boy network is very alive and well in Spain. Only the other day one of the alleged culprits from one of the biggest failed bank mergers got himself a nice little number as an advisor to the old ex state monopoly telephone company.
Apparently it's in perfectly good financial shape, it's bosses and workers get reasonable salaries, politicians are not involved in its operations and there is not a whiff of scandal about the way it does or has done business.