Recent history has taught that economic euphoria can lead to long-term imbalances. In midst of robust growth in Spanish GDP, European Commission and European Central Bank warn against repetition of mistakes of past: in a joint report released this Friday, y launch a warning against temptation of banks to immerse mselves in The bonanza and take excessive risks when granting loans. "The recent expansion of consumer credit deserves close surveillance," paper says.More information
- The Bank of Spain warns of risk in consumer credit
- The granting of consumer loans returns to pre-crisis level
The semiannual study on situation of Spanish financial sector, a consequence of ransom requested in 2012, draws a panorama with more lights than shadows. It highlights "comfortable liquidity position" of Spanish banking sector, fall in delinquency rate and high growth rate, of 3.1% in 2017, well above European average. However, it warns that financial institutions should extreme caution when it comes to lending, and not be carried away by high returns of this type of products in a low-rate environment that complicates profit margins. "Banks and supervisors must ensure a sufficiently conservative implementation of credit standards," y add.
The granting of consumer credit has returned to pre-crisis levels. Family spending has been one of engines of recovery in parallel to job creation. Last year grant to families of loans for se expenses reached 43,148,000,000 euros, surpassing even amount that was allocated to new mortgages. But possibility of banks spending too much resources on se loans without having well-covered backs worries. And not just European authorities. Last May, Bank of Spain warned in its financial stability report that significant growth of consumer credit deserves more attention and vigilance. The same message that Europe now moves.
The report leaves two or relevant messages. One, in which it calls Spain not to precipitate with sale of its participation in Bankia. "The Spanish authorities need to find best divestment strategy," say both Community executive and ECB. And two, Banco Santander must assume compensations arising from complaints by resolution of Banco Popular. "Since re is no asset protection plan in sale of popular to Santander, in principle second would be responsible for or potential demands for management of shareholders or creditors of popular."