New setback from the EU to bank tax promoted by the Government of Pedro Sanchez, which is voted this Thursday in Congress. In its joint semi-annual report on the 2012 bank bailout, the Commission on Ursula von der Leyen and the European Central Bank (ECB) warn that this rate will have a negative impact on the profitability of entities and their ability to generate capital organically. An unfavorable opinion that adds to the one already published by the ECB alone.
For the rest, the ‘men in black’ who oversee the bank bailout -according to the terminology used by the former finance minister, Christopher Montoro– warn of risk of increased delinquency due to rising interest rates and the energy crisis.
“The temporary bank tax, currently under discussion in Parliament, is likely to negatively affect the profitability of the entities in the coming years and reduce their ability to raise capital organically,” the report states.
[El BCE enmienda a Hacienda: su impuesto daña la solvencia bancaria y frena el crédito]
“The capital ratios of Spanish banks they still are lower than those of their EU peers, which justifies close monitoring, since credit quality may deteriorate in the coming months,” the ECB and Commission inspectors point out.
For all these reasons, the ‘men in black’ consider that “it is key that the final design of the tax is proportionate and avoid unintended consequences on financial stability and the financial sector.”
In any case, the report states that The Spanish banking sector has remained resilient and has not suffered from the “cliff effect” that was feared after the withdrawal of support measures due to Covid-19. At the same time, “second round effects from rising energy prices and rising interest rates warrant close monitoring.”
The slowdown in lending activity observed in 2021 has continued in 2022, to the point that loans to companies have exceeded loans to households in recent months. Public support measures have allowed safeguard the quality of the assets of Spanish bankswhich continued to improve in the first half of the year.
In fact, the non-performing loan rate was reduced to 3.88% at the end of June 2022the lowest level since March 2009. “However, rising interest rates, coupled with rising energy prices, are likely to have a adverse impact on the ability of borrowers to repay their debtparticularly the most vulnerable and the most energy-intensive sectors,” the report said.
The profitability of the banking sector continued to be strong in the first quarter of 2022despite the absence of the extraordinary measures that influenced the strong results of 2021.
Spain still has to return 23,700 million euros to the European rescue fund (MEDE), a figure that represents 57% of the amount of the 2012 bank rescue. The report by the ‘men in black’ concludes that our country has the capacity to continue paying this debt.
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