Banks Rescue Accounts to Detriment of Cleaning Their Books

23/04/2014 – El Mundo

Banks in Spain begin to note down benefits again and are more solvent, however their terrific default rate exposes their poor efficiency and  high delinquency risk.

According to data published by the Spanish Banking Association (or AEB by its abbreviation in Spanish) that examined 95% of domestic banks (savings banks excluded), the sector gained almost €7.8 billion in 2013. The amount is by €10 billion greater than in 2012 when €2.8 billion losses were registered.

Moreover, in just one year the amount intended for cleaning their balance sheets up from soured assets shrank by 40.6% in comparison to 2012 when banks destined around €40 billion (by about €15.9 billion more).

Undoubtedly, between 2012 and 2013 the default rate in banks rose from 6.5% to 8.6%, while coverage of the toxic assets declined from 69% to 55%.

Also, banking efficiency went down during the said period, namely it fell from 48% to 51% (meaning they needed to invest 51 Euros to earn 100 Euros). Exploitation expenses stagnated. The only positive figures indicate improvement in their solvency that appreciated by 120 bps (from 10.5% to 11.7%).


Original article: El Mundo (Marisa Recuero)

Translation: AURA REE