Financial Times Reporting Tranquil Times for Spanish Economy
Credit seems to be in abundance in the Spanish economy this summer and the banking system of the country is having quite a tranquil time according to the Financial Times. This increase in consumer confidence has led to a stronger property market and more jobs being created.
|The economy in spain keeps going from strength to strength.|
Unlike Italy, which seems unable to free themselves from the recession, the three year economic recovery of Spain is nothing short of remarkable.
There’s no more talks of bailouts, the amount of bad loans is down, mortgage lending is up, and according to the latest banking stress tests there’s barely any worry, concern, or drama in the banking industry. To put it simply; Spain is doing pretty well thanks. The bankers have come through the bad times and are now enjoying their own tranquil summer.
Spain was approaching the EU for a €100 billion bailout in 2012. Now the banking sector, along with the property industry, has gone through quite an impressive turnaround. The underperforming branches were closed down and staff were either let go or trained to become more efficient. The banking sector has essentially undergone a renovation and come out looking better for it.
The Financial Times said that Spain became the most over-banked country on Earth during their housing boom of 2004-2008. There was one bank branch per 1,000 residents. There are a lot less banks in the country following the crash. The country went from 46,221 to just over 30,000.
The math buffs will be able to see that’s a reduction of over 30%; a trend that wouldn’t be welcome in other countries. It was a necessary step for Spain to take though. The banks have become a welcome boost to the economy following the reforms rather than a profit-driven hindrance like they used to be. These days credit is flowing more freely to both households and small businesses.
Ángel Talavera, the Eurozone analyst at Oxford Economics, told the Financial Times that you need credit to flow properly to create a functioning economy. This was something seen during the recent economic crisis and now banks are beginning to support the recovery. More new loans are being approved than ever; something unseen for years.
José María Roldán, head of the Spanish Banking Association, backed up Talavera’s words. Roldán said that banks are now in a position to support the economic recovery without any problems. They have gone from dragging down the economy to becoming something more positive after cleaning up their balance sheets.
The data from the latest Banking Outlook of the BBVA showed that lending to Spanish households has risen 21% for this April compared to last April, with the terms offered on these loans being more favourable.
By recovering from such a bad position Spanish banks have become some of the most efficient in Europe. Spain saw a property bubble that led to problems in the construction and real estate sector, but the problems were quite concentrated. These days those problems are gone and everyone is benefiting.