It is a detailed analysis of evolving competition in the Spanish banking sector, with a focus based on the theories of industrial economics. The first part of the study examines the impact of regulatory changes and the expectations of European integration on the level and forms of competition in the sector. The second part considers the changes in the sector at European Community level, and from this perspective assesses the position of the Spanish banking sector and the responses of the banks within the framework of banking restructuring in the European Community.