Spanish banks may thrive in ECB capital requirements harmonisation

“It’s not so much about how much [capital] it’s about the definition of capital. There are too many, in my view, national options in the definition of capital in Europe and we have to address that. [ . . .] We may have to go to the legislature, to the European Parliament, to ask for more harmonisation in regulation,” Danièle Nouy said.

There are currently more than 150 variances in bank’s capital rules across Europe.

The increase in capital requirements that financial institutions in Spain have carried out, with the introduction of BIS III and the stress tests, are pushing entities to manage their risk-weighted assets.

However, higher capital standards, as well as regulatory uncertainty and different definitions of capital do not help to activate lending to the real economy.

“Entities are more concerned about how to manage their resources than doing their “genuine” work as lenders. Indeed, non-conventional monetary policy measures launched by the ECB are not being enough to boost credit lending in the eurozone,” ACF analysts pointed out.

Banco Santander raised €7.5 bn in an overnight share sale in January, which many market watchers believe will be used in part to cope with increased capital demands from the SSM. However, the Spanish lender denied this.