Financial Risks & Payment Mechanisms Explained

Actions for Check Default

Non-payment of a check must be accredited by one of the following methods:

• By notarial protest.
• By a statement from the drawee.
• By a dated statement from a clearing or compensation system.

Understanding Credit Risk Databases

Key sources of risk information in Spain include the Risk Information Central Bank of Spain (CIRBE) and Asnef-Equifax.

Risk Information Central Bank of Spain (CIRBE)

CIRBE is a public service managed by the Bank of Spain. It maintains an extensive database of credit risk information, including loans, credits, and guarantees, that financial institutions hold with their customers. This allows any lender to ascertain the total debt their customers have with other institutions.

Asnef-Equifax

Asnef-Equifax compiles information on various types of unpaid transactions for both individuals and corporations. Equifax collects and daily updates data on unpaid debts from a large number of financial institutions, energy companies, and more. Through this service, you can determine the current status of unpaid operations for a person or entity, identify clients who fail to meet other obligations (such as credit facilities or loans), or if a client is facing insolvency or bankruptcy.

Term vs. Referenced Deposits: Profitability & Risk

A fixed-term deposit is generally considered safer because the return is known upfront. In contrast, the profitability of a referenced deposit depends on market performance, introducing a higher degree of risk.

Bill of Exchange: Payment & Discounting Risks

Payment of the Bill of Exchange

The bill of exchange or its last holder must present it for payment on its due date, or within one of the two subsequent business days. If the bill is payable at sight, simultaneous presentment and payment can occur any day within one year following its creation date.

If the bill of exchange is not paid at maturity (or not accepted when acceptance is required, such as for sight drafts), a protest or equivalent declaration must be made.

In cases of default on a bill of exchange, the holder has a direct exchange action, allowing them to sue the acceptor or their guarantor. This action is not lost even if the bill was not presented on time or if a protest or equivalent declaration was not made.

The holder can also pursue a recourse action to reclaim funds from previous parties (endorsers and the drawer) or their guarantors.

Risk in Discounting Bills

It is preferable to discount accepted bills rather than unaccepted ones. With accepted bills, the drawee undertakes to pay, allowing the bank holding the collection to claim from them, as well as from the drawer and any prior exchange obligors, if they exist.

Banks typically require each discounter to sign a policy for negotiating bills of exchange and other banking operations. A notary public is often involved. The purpose of this policy is to ensure the credit institution's executive action to claim payment of the bills, even if any of them have been damaged or lost their exchange validity.