Trade Republic Granted License to Operate as Branch in Spain, Offering Local Accounts
The financial landscape in Spain is currently undergoing a significant shift as the Banco de España recently authorized Trade Republic, a German neobank, to operate as a foreign credit institution branch. According to Miguel Moreno Mendieta, writing for El País, this move will enable Trade Republic to offer current accounts to its Spanish customers, allowing them to directly deposit salaries and pay bills using a Spanish IBAN (International Bank Account Number) (Moreno Mendieta, 2025).
Expanding Services and Challenging Traditional Banking
Until now, Trade Republic provided its services in Spain through German accounts, a factor that deterred many potential clients. The new authorization means that within weeks, the neobank will begin attracting deposits into accounts with a Spanish IBAN, starting with the 'ES' country code. This positions Trade Republic alongside other financial technology companies such as Revolut, N26, and Bunq, all of which are actively challenging traditional banking models.
Neobanks often enter new markets by offering appealing products like credit cards, stock trading platforms, or high-yield accounts. This strategy allows them to build a customer base and gradually broaden their scope of services. Trade Republic has reportedly doubled its global customer base to eight million, managing over €100 billion in assets. The authorization to operate as a bank branch in Spain follows similar approvals received in France and Italy earlier in 2025. It's estimated that one-third of Trade Republic's clients now come from countries outside of Germany, where the bank was founded six years ago.
Benefits for Spanish Customers
A key advantage for Spanish customers opening an account with a Spanish IBAN through Trade Republic is the bank's handling of tax withholdings on account earnings. Previously, with earnings generated in a German account, customers were responsible for calculating and declaring these earnings to the Spanish tax authorities. According to Trade Republic, having a 24-character account number beginning with 'ES' enhances customer perception, making the institution feel more accessible and local.
«The fact that the customer has a 24-character account that starts with ES improves their perception, making them feel the entity is closer and more accessible,» Trade Republic stated. (Moreno Mendieta, 2025)
Furthermore, once Trade Republic begins accepting salary deposits, it aims to become the primary financial institution for its customers by managing their main income stream.
Competitive Advantages and Investment Options
Trade Republic has primarily focused on providing customers with competitive returns on their investment accounts, previously offering up to a 4% annual equivalent rate (TAE). These accounts serve as a temporary holding place for savings before they are allocated to other investment products. Currently, Trade Republic offers an annual return of 2.53% on its accounts, along with a free debit card that invests 1% of each transaction into a savings plan. The platform also provides commission-free access to stock markets for trading stocks, low-cost exchange-traded funds (ETFs), and cryptocurrencies.
The neobank has also recently started offering state-backed tax-advantaged savings products in select European countries. With the current authorization in Spain, Trade Republic has the potential to offer bank deposits, although it is not presently considering launching this type of product.
The Rise of Neobanks and Digital Transformation
The surge in popularity of neobanks in recent years has expedited the digital transformation of the banking sector. These institutions were established with a purely online focus, centered around user-friendly mobile applications, which has exerted considerable pressure on traditional banks. In Spain alone, digital banks have captured a 30% market share, experiencing growth of over 60% since 2020. This indicates that they are attracting one in every three new customers.
However, it's important to note that some of these digital banks are subsidiaries created by large banking groups to compete in the digital space, such as Imagin by CaixaBank and Myinvestor by Andbank.
Impact on the Spanish Banking Sector
The entry of Trade Republic into the Spanish market is likely to intensify competition among both traditional and digital banking institutions. The ability to offer local accounts with Spanish IBANs is a significant advantage that could attract a substantial number of new customers. The bank's focus on providing attractive investment options and commission-free trading platforms may appeal to tech-savvy consumers looking for alternative banking solutions. The long-term impact of Trade Republic's expansion on the Spanish banking sector remains to be seen, but it is expected to accelerate the adoption of digital banking services and drive innovation in the industry.
References
- Moreno Mendieta, M. (2025, March 18). El Banco de España autoriza a Trade Republic a operar como sucursal y a ofrecer cuentas corrientes. El País. Retrieved from https://elpais.com/economia/2025-03-18/el-banco-de-espana-autoriza-a-trade-republic-a-operar-como-sucursal-y-a-ofrecer-cuentas-corrientes.html
