The crisis has forced a consolidation process amongst the savings banks, which previously represented 50% of the country’s financial system. But there are no saving banks anymore. They have been transformed into new banks or have been absorbed by existing institutions.
The joint capitalisation of Spain’s seven listed banks now totals over € 200 billion, with two standing out: Santander (€ 95bn) and BBVA (€ 56bn). Two thirds of their business is generated overseas.
La Caixa is number 3 in the capitalisation ranking with € 25bn. Formerly Catalonia’s leading savings banks, La Caixa swapped its traditional structure to become a bank. It is Spain’s biggest in terms of branch network and volume of assets.
The next three banks in the ranking are all very different as far as their nature and history are concerned.
Bankia, formed by a group of bailed out and nationalised savings banks, has a capitalisation of € 14bn. It is followed by two traditional banks, Sabadell (€12 billion) and Popular (€ 10 billion).
Sabadell has been the most active lender on the integration front over the last decade, incorporating a dozen banks. It is now betting on internationalisation in the UK and the US.
Popular’s story is something of an unusual one. Once one of the most efficient commercial banks in the world, its exposure to toxic loans related to Spain’s property sector eventually took a heavy toll on the lender.
But Popular is now in a recovery phase using its own resources.
The last bank in the capitalisation ranking is Bankinter with € 6 billion. It is the most efficient, and has hardly been affected by the crisis or, up to now, by the merger process.
The seven listed banks have reported profits in the first quarter of this year. Their margins have also returned to positive territory due to a restructuring process over the past 5 years worth a total of € 300 billion . They have also raised € 50 billion of additional capital to comply with solvency ratios in the order of 10%.
Banks have always been the backbone of the stock market and the financial system. But the crisis hit them hard, so they have adjusted their costs (cuts of 25 percent in structure, staff and branch network), as well as their balance sheets. And all of this with the aim of getting back to the starting box, different, but not dissimilar.