2023-07-02 05:04:29
When will the big banks start paying for deposits? It is the question that traditional savers ask themselves and that the Government has put in the media spotlight in the midst of the electoral campaign. But Santander, BBVA and CaixaBank, which account for around 60% of the share in deposits in Spain, they move away for the moment the war for liabilities. And one of the reasons is that still they have 29.4 billion euros in cheap financing from the European Central Bank (ECB)which gives them room for maneuver to delay payment in favor of improving the income statement and in the face of the general drop in demand for credit, according to what various experts explain to Vozpopuli.
The ECB launched a mega-injection of liquidity in banks under very advantageous conditions to avoid the credit crunch during the pandemic. These auctions, known as TLTROthey injected a record of 1.3 trillion into the European financial system, of which the three large entities still have the almost 30,000 million cited to be returned in March 2024the last window to do it.
Banks took advantage of this ultra-cheap liquidity to generate what were called ‘benefits from heaven’, that it was nothing more than to ‘save’ this money in the Eurobank, taking advantage of the rate hikes that began in July 2022. But the ECB decided in October to tighten the conditions of the TLTROs to drain excess liquidity and thus help combat the high inflation.
This remaining liquidity allows banks to enjoy sufficiently comfortable ratios to delay the payment of deposits, although the trend may change in the second half, more towards the end of the year, according to sources close to the entities. “Banks continue to enjoy a comfortable position in terms of liquidity that allows them to strategically manage deposits,” he explains Francisco UríaGlobal Head of Banking at KPMG.
Prudence in the payment of deposits
For Uría, the medium-term trend of the large banks will be to remunerate the savings of individuals, although he anticipates that the entities will manage their margin with “great prudence” in the face of economic uncertainty.
Eduardo Areilzasenior director of the consultancy Alvarez & Marsal, points to another more relevant variable, in his opinion. “It is more important to see if the credit of the system grows and if the banks are going to have to look for deposits to finance the growth of the balance sheet,” explains Areilza. The demand for and the granting of credit are falling due to the tightening of monetary policyas verified by the Bank of Spain in its latest loan survey, corresponding to the first quarter of the year.
“The Government has little room to legislate a few days after 23J, but it is not ruled out that it will remain in La Moncloa or in office if the elections are repeated, as they fear in the banking sector
Spanish banks have some credit-to-deposit ratios of 200% vs. 150% for their European counterparts, according to a recent study by Alvarez & Marsal on the liquidity position after the crisis suffered by Silicon Valley Bank (SVB) and Credit Suisse. The buffer, in addition to covering possible sudden outflows of funds, amounts to 85.2%, which would make it possible to withstand a quarter with liquidity stress.
No general offers
“It will end up paying, but it will not be widespread or great returns,” warns the financial director of one of the large Ibex banks. From another of the most important entities in the country they also point out that the interbank market shows no sign of “exhaustion” to cover the liquidity needs of the banking business.
Although from the business point of view the payment of deposits is moving away, the pressure of Nadia Calviño, economic vice president of the Government, threatens to damage the sector’s battered reputation. The financial and communication teams of the banks try to balance the positions in a debate at street level and that has entered the campaign.
Order to the CNMC
The last chapter in the controversy over deposits took place this Thursday, when Calviño took advantage of a scheduled meeting on the mortgage agreement with the employers’ associations AEB, CECA and Unacc, together with the governor of the Bank of Spain, Pablo Hernández de Cos, to redouble the pressure on the big banks. The Government has commissioned a report from the CNMC and the Bank of Spain to detect whether there are obstacles to competition in deposits.
But the economic vice president did not stop there. And she launched a serious threat to Santander, BBVA and CaixaBank if they continue without remunerating the savings of individuals: Regulatory changes may be made to force this based on the Competition report. At the moment, the Government has little room to legislate a few days after 23J, but a tight electoral result can lengthen the acting Executive if the elections are repeated, without ruling out that the PSOE surprises and remains in La Moncloa, as they warn in private different bankers.
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