The Bank of Spain claims that it does not have enough evidence to prove that the Spanish bank transferred the extra cost that the payment of the extraordinary tax to the sector represented to its customers. And it has done so by comparing the behavior of the banks obliged to pay the tax with respect to what those who were exempt or with entities in other countries where the tax did not exist, as stated in the conclusions of the report published yesterday, An analysis of the evolution of banking activity in Spain after the establishment of the temporary lien.
The analysis is carried out to verify – as established by the rule – that the payment of the tax “will not be subject to economic repercussions, direct or indirect” to the clients of the entities. The Central Government did not want the extra cost that the tax represents for the banking sector to be ultimately borne by the depositors. In the work, the Bank of Spain assures that “after the introduction of the levy, the empirical analysis does not reveal significant differences between the entities subject to the levy and the rest of the entities”. The report analyzed “the evolution of the unit margin and the interest margin associated with loans and deposits from households and non-financial companies, or commissions”.
It only detected a negative effect “on the volumes and types of household term deposit operations”. However, the Spanish banking supervisor qualifies the difficulties he faced in “identifying” the possible negative effects of the implementation of the levy. The main difficulty “lies in the fact that the announcement of the measure almost coincides with the start of the cycle of interest rate hikes by the European Central Bank (ECB) in July 2022”.
Therefore, in cases where increases in the cost of loans have been detected, for example, it is not possible to know whether they are due to the additional cost of paying the tax or simply due to the increase in interest rates.
Last year, the collection for the bank levy affecting credit institutions such as Santander, BBVA, CaixaBank or Sabadell, among others, totaled 637.1 million euros. When it was launched, a debate was generated in the sector precisely about whether the bank should pass the cost on to customers or not. The National Markets and Competition Commission (CNMC), together with the Bank of Spain, were in charge of monitoring the non-transfer of the cost.
In the report, the Bank of Spain specifies that “the complementary analysis of the differences between the banking sectors of several European countries finds conclusions in line with those of the Spanish analysis”. That is why he rules out the possible transfer to prices.
Despite the banking tax, the five largest banks listed in Spain, Santander, BBVA, CaixaBank, Sabadell and Bankinter, achieved record aggregate profits of 26,093 million last year, 27% higher than the previous year . The improvement in results, as already occurred last year, is due to interest rate hikes, which have made loans more expensive at a faster rate than the revaluation of deposits.