Bank of Spain maintains countercyclical buffer for Spanish banks at 0%

Banl of Spain building

The Bank of Spain will maintain of the counter-cyclical buffer at 0%, arguing that (a) the credit-GDP gap continues in negative territory, and (b) the Spanish economy still shows a remarkable strength as the GDP increased by 0.7% t/t in 1Q19.

Analysts at Bankinter commented: “We consider positive for the profitability of the financial entities that the Bank of Spain has not increased the capital requirements of the Spanish banks. Although thanks to the excess of capital that the entities have over the regulatory requirements, they would not have had a problem absorbing the 25bp / 50bp that was thought to be imposed, in the end an increase in requirements usually implies a subsequent increase in the target ratios of the entities.This would have implied an additional reduction to the profitability of the own resources of the entities that is under pressure to a large extent by the level of interest rates.”