“German banks haven’t been supervised the way the Spanish have”

Does it make any sense to have again a pro-cyclical banking policy, and require higher capital ratios, provisions and liquidity levels than before the crisis?

Accountancy rules have been very pro-cyclical, indeed, and international financial reporting standards over here have been drawn following the US model. This has caused some frictions, because the American model seeks neutrality and adjustment to the markets constantly…

Which changes the value of companies constantly, too.

This brings excessive adjustment and, yes, it’s pro-cyclical. The traditional European model is more cautious, emphasises solvency. Once our model went down the drain, the pro-cyclical mentality took over.

So it would be sensible to delay the introduction of the new framework until 2019…

Of course. But the reason why Basel III has been postponed is that some countries could not comply with it. There are banks, national financial systems that could not reach the ratios on capital and liquidity. Let me be clear on this: Spain could, but it was impossible for some other countries. In the end, geopolitics won this hand. It was all about trying to stop the so-called peripheral crisis getting to the core countries.

The former director of regulation of the Bank of Spain recently said that Spain’s banking policies have made it look like the country with most problems instead of the country that, simply put, is most honest about its problems. Do you agree?

Absolutely true. Have we been allowed to look into the German savings banks, for instance? We haven’t, not the savings banks, nor the banks. When they had trouble with Hypo Ryal more than €100 billion were needed, whereas in Spain it turned out that we could do with less than €40 billion. What marked the difference is that Spain had to ask for help, while Germany put the money from its own pocket.

This year seems to have begun amid a substantially improved environment for sovereign debt and corporate issuers. 

That is correct. The change came about by the time Banco Popular increased capital. Investors that had short positions to cover became afraid: if Banco Popular could get €2.5 billion, that means that the situation in Spain is better. Some of the new demand could be just that, investors who thought prices were going down and must hedge their options. Nevertheless, the situation is much better now, the markets were pretty much closed before.

What about the interbank market? It it still closed, limited to the national system?

There are some operations going on, but at a very short term, one day or one week. The monthly interbank credit is still quite difficult.

And rate interests remain low.

It would be a good thing to have some inflationary pressure, a positive symptom, but no, there isn’t any at all.

It appears that only the Germans are against some inflation, which would help our deleveraging process. Even the International Monetary Fund advocates for higher inflation targets. I doesn’t look clever to put all your eggs in the austerity basket.

Oh, well. In Japan, in the US, inflation is not the number one enemy. This obsessive austerity is not working, and the Spanish government rightly complaints against it. It was necessary in order to clean the house, but now we need stimulus, too, so the economy grows again.

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