The rises in interest rates and the recent turbulence in the European financial system as a result of the Credit Suisse crisis are leading Spanish banks to toughen the conditions for loans to companies, whose interest rates have already tripled in barely one year.
Banking sources recognize this trend and explain that it is due to the fact that entities "are now more prudent because there is a lot of uncertainty and the priority is to protect customers, which is done by providing responsible financing." They deny that the tap on loans to companies is being turned off, but they do agree with many analysts in the diagnosis: "risks are increasing, demand is reversing and the banks' ability to lend is limited."
The current situation in the markets is deepening the increase in the cost of the debt that began in the middle of last year, with the rise in interest rates. According to the latest data from the Bank of Spain, the average rate on new twelve-month loans to companies of more than one million euros stood at 3.44% in January, three times more than the 0.96% of a year before. When the money is lent for more than five years, the cost rises to 4.41%, compared to 1.08% in January 2022. Loans of up to 250,000 euros between one and five years have gone from 2.63% to 5 .87%
The employer of small and medium-sized companies, Cepyme, denounces that SMEs are suffering a "strong credit restriction", to the point that loans have gone from being equivalent to 19.8% of sales before the pandemic to being around now 14.7%. Current interest rates, she notes, are at their highest level since 2015. The speed of credit tightening is the fastest since 1995.
For Leopoldo Torralba, deputy chief economist at Arcano Research, "the banks have the scare in their bodies after the episodes of the last two weeks, despite the fact that their solvency and liquidity situation continues to be very healthy." “They have realized that their liquidity risk was greater than what they anticipated”, despite being “well managed” and “doing their homework”.
Interest rates "are not going to rise much more" in part because the turbulence of these days has anticipated the effects of additional increases by the ECB. The banks are now going to have to look for more liquidity and, at the same time, fight for their profitability, which leads them to “lend less”, adds Torralba.
The volume of bank loans to companies already fell sharply in January, standing at just 356 million euros in loans for more than five years of more than one million euros, when on average they had been around 2,000 million euros per month until July of last year. The drastic fall is partly due to the fact that large companies have found better financing in the debt markets than among banks.
Smaller companies have also been able to finance themselves to date through ICO lines and guarantees, and are now awaiting the arrival of part of the European funds channeled through credits, the amount of which is around 84,000 million euros and may allow them to get around bank financing.
Meanwhile, all eyes are on the health of the entities after the fall of Credit Suisse and the doubts surrounding Deutsche Bank. The governor of the Bank of Spain, Pablo Hernández de Cos, yesterday defended the solvency of European and Spanish banks after the episodes of recent days, marked by "specific circumstances." As on other occasions, he asked entities to be prudent and not to stop providing for risks, and he also had words for businessmen. “They are the ones who create wealth, generate employment and activate the economy,” he said.
Tranquility returned to the markets yesterday and the Ibex rose 1.29%, with banks recovering. Santander advanced 2.17%, compared to 2.07% for BBVA, 1.53% for Sabadell, 0.86% for CaixaBank and 0.59% for Bankinter.
The president of CaixaBank, José Ignacio Goirigolzarri, stated at the Wake Up Spain forum that banks have "enormous strength" and that the scenario in Spain and Europe is "radically different" from that of the United States. The president of BBVA, Carlos Torres, also spoke, who said he viewed the situation of European banks "with confidence."
