Fiscal year 2012 has been the year of asset clean-up, capitalization, and the beginning of the definitive restructuring of the Spanish banking system
Spanish banks have provisioned a large part of the high regulatory clean-up of foreclosed assets and real estate loans required for the current fiscal year against their income statements
Our entities safeguard depositors’ savings, do not need to request public capital aid, and will thus be able to, in sum, contribute to financing the recovery of the Spanish economy
It is necessary to undertake the structural measures required to enable economic growth as soon as possible, reduce the high unemployment rate, and improve social prospects
Spanish authorities are implementing profound structural reforms – labor, budgetary, fiscal, and financial – to help correct the macroeconomic imbalances accumulated by our economy as soon as possible.
The Secretary General of the AEB, Mr. Pedro Pablo Villasante, characterized fiscal year
2012 “as the year of asset clean-up, capitalization, and the beginning of the
definitive restructuring of the Spanish banking system.” A year in which, as he explained, Spanish
banks are undertaking a kind of extraordinary regularization in
compliance with the requirements of Royal Decree-Law 2/2012 and Law 8/2012, thus completing the
clean-up of their foreclosed assets and real estate loans.
This extraordinary effort has been reflected in the results of Spanish banking
groups, which decreased by 64% in the first nine months of the year. Mr. Pedro
Pablo Villasante attributed this significant decrease, on the one hand, to the fact that, as of
September 2012, Spanish banks had already provisioned a large part of the high
regulatory clean-up of foreclosed assets and real estate loans
required for the current fiscal year against their income statements, and on the other hand, to the fact that banking
activity continues to develop in a weak economic environment, once again under economic
contraction (double recession) and in very unfavorable financial circumstances.
Given the difficulty of the economic and financial situation in which both
Spain and other Eurozone countries find themselves, the AEB Secretary General believes that
“it is necessary to undertake the structural measures required to enable economic
growth as soon as possible, reduce the high unemployment rate, and improve
social prospects.”
In his opinion, the Spanish authorities are adopting demanding and profound structural
reforms – labor, budgetary, fiscal, and financial – to help correct as soon
as possible the macroeconomic imbalances accumulated by our economy, such as
the bloated fiscal deficit, the high dependence on external financing, the
recapitalization and restructuring of some former savings banks, as well as to
achieve the necessary improvement in competitiveness.
For their part, the banks of the Spanish Banking Association maintain their commitment
to the Spanish economy, which, in their case, is concretized in maintaining adequate risk
management of their banking activity and in the effort to preserve their economic
and financial situation. “In this way, our entities safeguard depositors’
savings, do not need to request public capital aid, and will be able to, in sum,
contribute to financing the recovery of the Spanish economy.”
Mr. Villasante highlighted the effort Spanish banks are making, in these
difficult economic and financial circumstances, to strengthen their balance sheets and comply
with the authorities’ requirements to increase the clean-up of their
assets and, at the same time, higher quality own funds. All of this, through their
own means and without requiring public aid.
He reported that, as of September 30, 2012, the capitalization level of Spanish banking groups remains well above the minimum requirement of 8%, with a
BIS ratio of 12.87%, reflecting an excess of own funds over the minimum
necessary of 53,562 million euros. The highest quality part of the solvency ratio,
Core Capital, is 10.46%, 131 basis points higher than a year earlier.
This intense effort, according to Mr. Pedro Pablo Villasante, has also been reflected in the
area of provisions. From 2007 to September 2012, the provisions
made against the consolidated income statement of Spanish banks have
reached an accumulated amount of 125,581 million euros, 41,761 million more
than the consolidated attributable profit for that period, and has meant, in terms
of average total assets, that the annual clean-up level is more than twice
the amount allocated to clean-ups before the crisis.
Finally, he referred to the recent European Council agreement for the ECB to
become the supervisor of European banks. In this regard, he noted that the AEB
member banks unreservedly support the Banking Union project, of which the
designation of the ECB as the single supervisor of the Eurozone constitutes the first
essential step to overcome the perverse spiral existing between banking
debt and sovereign debt which, in addition to prolonging the climate of financial
uncertainty, is delaying the exit from the current crisis.
