Spain is the subject of any concerns this week. Financial Times highlights the massive refinancing of Iberian banks from the ECB while El Econmista, a Spanish newspaper, described the preparation of a plan with 250 billion euros to avoid a crisis of "liquidity". A rumor that only reinforce the arrival of Dominique Strauss-Kahn in Madrid on Friday. Despite the denials, the rate of duty Spanish 10 years tended to levels not seen Wednesday, increasing to 4.86%. This frenzy is justified? Not for Philip Sabuco, economist at BNP Paribas.
Spanish banks borrowed 85.6 billion euros at the ECB in May What does this say about the soundness of the banking sector?
This confirms that the Spanish banks are struggling to refinance themselves on the interbank market.The distrust of the Spanish banking sector as a whole, moved up a notch. But situations differ radically from one institution to another. On one side there are large private commercial banks, such as BBVA and Santander, which are relatively strong, and the other, the regional savings banks, which show contrasting situations. Some are quite strong with well diversified business, both sectorally and geographically. Others, particularly on the coast, have a primarily regional location and are mainly exposed to construction and real estate. In recent years, these funds have lent a lot, both to individuals and builders / developers. Today they are particularly affected by the bursting of the housing bubble.These developments argue for an acceleration of the trend toward consolidation of savings banks.
Yet even BBVA denied loans on the international interbank market. Large banks not they inspire more confidence?
The Spanish commercial banks have also suffered from economic downturn. By way of illustration, the rate of bad loans by commercial banks is the same as that of savings. Commercial banks are also exposed to real estate. Rather than allow some developers go bankrupt, some are mounted in the capital of these companies, while others have bought the real estate developers in exchange for debt … In addition, these banks are particularly exposed to SMEs, whose defects are later.Still, large commercial banks are relatively well provisioned and more diversified. Santander, for example, carries out two thirds of its income outside Spain. It would be regrettable if all banks are uniformly penalized.
Some German and Spanish newspapers say that Spain is preparing to seek financial assistance from the euro area, after Greece … Is this related to banking problems?
These rumors have been formally denied. They reflect some concern about the evolution of Spain's public finances. But these concerns are not fully justified. According to our estimates, in 2012, the Spanish public debt could avoisinner 85% of GDP, against almost 95% on average in the euro area. These fears appear, therefore, somewhat exaggerated.In passing, we should acknowledge the role played here by the ECB, which temporarily overrides the interbank market by lending money to Spanish banks, allowing them to continue financing the economy by distributing credit.