Spanish financial sector reduces its assets

Spanish banks: attractive valuations but fragile trading

J.L.M. Campuzano (AEB) | According to a report recently published by Spain´s stock market regulator (CNMV), the size of the banking system, in terms of the aggregate volume of assets for its activity in Spain, shrank in 2018 and returned to the tendency which began in 2017.

In concrete, the total assets of the Spanish financial system amounted to 4.7 trillion euros at the end of 2017, almost four times GDP. In 2012 it exceeded 5.2 trillion euros. If the total size is somewhat smaller than the global average, the weight of the banks is well over 60% compared to 45%.

The study also analyses the level of interconnection between the different components of the financial system. In the case of banks, both the rights and the obligations compared to other financial institutions remain delimited at a percentage around 10% of their assets.

The crisis has shown that the potential risks to financial stability can originate in and be transmitted by the non-banking financial sector. This has led the authorities to study in detail the potential risks arising from their behaviour and in this way create adequate instruments to prevent them or mitigate them. In Spain, investment funds, securitisation, financial credit establishments, value companies and reciprocal guarantee companies all form part of non-banking financial intermediation