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Spanish banks are resilient to market tensions, Bank of Spain Governor says

Spanish banks are resilient to market tensions, Bank of Spain Governor says By Reuters

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Economy 1 hour ago (Mar 21, 2023 09:10)

© Reuters.

By Jesús Aguado

MADRID (Reuters) – Spanish banks are resilient in the face of market tensions and have “strong capital and liquidity positions”, Bank of Spain Governor Pablo Hernandez de Cos said in an interview released on Tuesday, as officials sought to underpin confidence in the financial sector.

“Due to the retail-oriented commercial banking business model, which is the majority in our financial system, the Spanish banking sector has shown remarkable results in the last year,” De Cos told newspaper Expansion.

The interview was published following UBS group’s state-backed takeover of Credit Suisse (SIX:CSGN) at the weekend.

Deputy Bank of Spain Governor Margarita Delgado said last week that Spanish banks had only a “residual” exposure to Credit Suisse. A source with knowledge of the matter previously told Reuters that the total exposure in Spain was well below 1 billion euros ($1.1 billion), without elaborating.

The market turmoil started earlier this month after the demise of U.S. lender Silicon Valley Bank and continued with concerns about the liquidity position of First Republic Bank.

On Tuesday, shares in Santander (BME:SAN), BBVA (BME:BBVA) Sabadell were around 4% up at 0835 GMT as they recovered from steep losses last week.

Echoing comments from European Central Bank President Christine Lagarde, De Cos said that the banking sector throughout the euro area was resilient.

“This has been the result of the regulatory reform agreed at international level over the last decade which, in the case of Europe, has been applied to all banks, regardless of their size,” De Cos, which is also member of the ECB’s governing council said.

European banks have continued to reduce their bad loans, increased their profitability and have benefited from the positive effect of higher interest rates, he added.

Spanish banks are resilient to market tensions, Bank of Spain Governor says

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