The European Central Bank (ECB) recently decided to maintain its road map and increase interest rates by 50 basic points (0.50%) until 3.50% in spite of the current financial sector’s instability triggered by the SVB fall in the U.S., doubts amongst European institutions with the Credit Suisse collapse, and its request for liquidity to the Swiss National Bank.
With this in mind, Vicenç Hernández Reche, economist and Tecnotramit’s CEO calls for calm and reminds us that: ‘Up until now, Spanish banks have done their homework well as far as abiding by available liquidity policies with regards to clients’ total capital. No need for the sector to rush into alarming analyses.’
Stock exchange falls should not be cause for alarm
The expert stresses: ‘Although a request for liquidity on behalf of an institution the size of Credit Suisse is not the best of news, the European banking sector has moved for several years now in stable parameters and records controlled risk ratios.’
In this sense, Hernández Reche recognises ‘the IBEX-35 fall is logical, since money is cowardly and such news affects market trust’, but ‘we tend to erroneously measure a listed company’s stability only on their stock exchange price but analysing a company is much more complex, specially when dealing with the banking sector.’ ‘The main Spanish financial institutions are not too exposed to the market’s loss of confidence in Credit Suisse. Furthermore, we must emphasise our banks have not been exposed to cryptocurrencies and financing technological companies, specially start-ups,’ he adds.
Mortgages from a collapsing bank
In this vein, many Spaniards could believe their mortgage loan could be at risk if uncertainty in the European banking sector affected the Spanish mortgage market. Fears that do not correspond to the financial sector’s current stability and functioning.
As explained by Carles Solé, Tecnotramit’s Mortgage Loan Coordinator: ‘When a financial institution goes bankrupt, all liability that lead to the situation plus a series of assets can be bought fully or partially by other financial institutions or the State, and, in this case, all rights and obligations of the bankrupt institution would become part of the public treasury.’