Spain - Banking Regulation 2019

The landscape of the banking sector in Spain
Spain - Banking Regulation 2019
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April 1, 2019

The latest Financial Stability Report issued by Bank of Spain dated November 2018 provides an updated description of the Spanish banking sector. In a nutshell, some key references are as follows: (i) consolidated P&L of the financial sector has increased by 12.5% due to the high reduction in losses derived from asset depreciation; (ii) total consolidated assets decreased by 0.5%; (iii) loans and credits to the private sector have decreased by 2.9%; (iv) the NPL rate (tasa de morosidad) has gone down to 3.6% (meaning a decrease from 4.5% compared to 2017), although the impaired assets level is still high (increase default signs in consumption), despite the important reduction in the past years (-60% since 2013); (v) recourse of Spanish banks to the Eurosystem continued at a high level (€168b) but has at least not increased in the last three years (average allocation to Spanish entities was 22%); (vi) private deposits at banks and their patrimony on a consolidated basis increased by 0.6% but in total decreased by 1.3%; (vii) the level of provisions due to asset deterioration has also decreased due to better performance, and impaired assets (dudosos) have been reduced by 26.7% in the last year; and (viii) common equity tier 1 capital ratio (“CET1”) has been reduced slightly to 11.9% and has only increased by 0.3% since 2014. The report also cites evidence that the credit to SMEs in Spain went down 7.2% and that the Spanish banking system is more efficient than comparable systems in the main European jurisdictions and the European average.

Banking Regulation 2019. Global Legal Insights, 6th Edition, 2019.Banking Regulation 2019. Global Legal Insights, 6th Edition, 2019.

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April 1, 2019