Nuevo shock in sight between banks and the Government. Bankers fear that Pedro Sánchez could open a new front with the sector due to the low profitability of deposits after the forced agreement on mortgages, according to different sources close to the entities. Spanish banks they pay half of their European competitors despite pressure from the European Central Bank (ECB), which has raised the price of money three times since July to curb inflation.
Santander, BBVA, CaixaBank and Sabadell are reluctant to recover in their catalog the star product of the most conservative savers. In some cases they are limited to remunerating for paid online accounts, which in Sabadell can reach up to 3% APR. The bankers defend that there is “lots of liquidity” in the system as the main argument for not launching to attract deposits, as claimed by Onur YoungCEO of BBVA.
“Banks have to watch over the business plan. And right now we shouldn’t pay for deposits because it would not be a profitable strategy for our shareholders”, defends in private a director of one of the big banks of the Ibex.
Luis de Guindos anticipated this week that “sooner or later” deposits will end up rising. The Government also subtly pressured by using low profitability as an argument for the ‘tax'”
Luis de Guindos, vice president of the ECB, has urged banks to pay for deposits after the central bank raised the deposit facility from negative rates al 1,5%. This rate sets the interest that credit institutions receive for keeping their money overnight at the central bank. Guindos said this week that “sooner or later” the remuneration of these products will end up rising.
The Government added to the pressure of the ECB, although in a more subtle way and coinciding with the clash with the sole supervisor on account of the ‘tax’. In fact, he used the low return on savings as a new argument to justify the new tax on “extraordinary benefits”, according to sources from the Ministry of Economic Affairs. For the bankers, this nuance did not go unnoticed and for this reason it is feared that Sánchez could use the sector as a “throwing weapon” in an election year like 2023, according to a bank executive.
The bankers are suspicious of the relationship with the Executive because of the ‘tax’ and the agreement to which it has pushed them to protect vulnerable families. In the first case, the entities anticipate that they will fight the legal battle and appeal each of the four payments with which Sánchez aspires to raise some 3,000 million between 2023 and 2024.
Cost of the mortgage agreement
In the second case, banks were dragged into a pact to avoid reputational impact when they consider that there is no urgency and also analyze “case by case” to facilitate the payment of mortgages. In any case, they will have to make provisions for term extensions and deficiencies, which can amount to up to 2,000 million, according to industry sources.
The type of household deposits with a term of between one and two years, one of the most extended in the market, stood at the 0,59% TEDR (Annual Equivalent Rate excluding commissions) in September, according to the latest statistics from the European Central Bank (ECB). supposes almost half the return that the banks pay on average in the the euro zone (1,09%).
The Spanish bank would have to pay some 8,400 million for the savings assuming a return of 1.5%which is what the State pays for lower-risk bills, according to recent estimates by the consultancy Alvarez & Marsal.
Source: Vozpópuli by www.vozpopuli.com.
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