Recapitalizations, bad bank … the aids to the Spanish banking already overcome the 159,000 million
- Official figures from the Bank of Spain limit public aid to 61,366 million, but millions of public and private money are omitted.
- Thus, the entities have obtained more than 50,000 million transferring their toxic assets to Sareb, and have more than 40,000 million in protected losses.
- Brussels estimates that 87% of capital injections will be losses (43,000 million); the FROB estimates that 72% (36,197 million) will be lost.
Last September, the Bank of Spain published an informative note in which it counted the public aid destined to recapitalize the Spanish financial system between 2009 and 2013. The official figure is about 61,366 million euros , including the European rescue of some 40,000 million. It does not recognize – as the banking supervisor admits, “due to its different nature” – other types of aid made available to entities with the explicit or implicit support of public administrations .
The Bank of Spain itself acknowledges that it does not officially account for all aid to the financial system Adding these other real aid but not accounted for by official statistics, the recapitalization of Spanish banks would have already cost more than 159,000 million euros , with other measures such as the asset protection schemes and the various acquisitions of toxic assets, according to calculations of this newspaper based on reports from the Citizen Audit Platform of the Debt.
A similar amount of aid – more than 156,000 million – arrives at the economics professor Joaquín Maudos, in an article published in the last issue of the Economic Information Papers published by the Caja de Funds Foundation (Funcas). In his case, however, to the injections of capital (54,700 million) adds another 101,600 million between different types of “contingent debts”.
Losses on direct aids
The taxpayer has rescued the Spanish financial system directly through two public aid programs (called FROB 1 and 2) that cost 977 and 13,427 million euros, respectively, and the direct recapitalization of the European assistance program, for an additional amount. of 39,078 million euros . The Bank of Spain also adds another 7,884 million euros paid by the Deposit Guarantee Fund (FGD), an organization that has the State guarantee.
Technically, the public participation in the Sareb is 2,000 million, but it is the guarantor of 50,000 million in debt. The current calculations prepared by the Fund for Orderly Bank Restructuring (FROB) now estimate that 72% of the investment made will be lost : more than 36,197 million, figure admitted by the Government itself. The European Commission, for its part, raise these losses to 87% of the injections, more than 43,000 million that will go directly to the public deficit . So far the official accounts; but the salvation of the financial system has more costs.
More than 52,000 million of the ‘bad bank’
This is the case, for example, of the so-called bad bank , the Asset Management Company from Banking Restructuring (Sareb), a semi-public body that has acquired 40% of the toxic assets (land, loans to developers, real estate .. .) of the financial system. These assets, although they were acquired with an average discount of 63% over their theoretical value (estimated by the entity itself in their accounts), did not find another buyer since the bursting of the real estate bubble, and have thus led to an indirect injection of capital for entities .
Technically, public participation in the Sareb, the largest real estate in Spain, is 2,192 million, which is the amount of public money that has been used to enter the capital of this entity. However, the more than 50,000 million spent to acquire the toxic assets are debt guaranteed by the State . That is to say, the immense majority of the risk for future losses of the bad bank is backed by the Spanish citizens. “Simulating that it is not a public company [55% of the shareholders is private] is nothing but a flagrant fraud of law,” as economist Carlos Sánchez Mato points out of the Platform for the Nationalization of the Savings Banks.
Nor are officially accounted for, but have been used, other than 21,000 million euros that the administration set out in various plans to provide liquidity to financial institutions , such as the Fund for the Acquisition of Financial Assets (FAAF), liquidated in 2012.
The EPA, help for healthy banking
Asset protection schemes represent a shield against possible losses when buying a nationalized entity The Bank of Spain also admits that it does not count the so-called “asset portfolio protection schemes” (EPA). This type of program supposes, in theory, a support to the integration of financial entities with problems within healthy entities, by means of a public guarantee on the future losses of certain assets. Thus, for example, Banco Sabadell acquired the CAM in 2011 with the condition of enjoying a shield for 80% of the future losses of a portfolio valued at 16,000 million euros.
The EPAs, which allow entities to reduce their volume of provisions (that is, their mandatory reserves for future losses), are “a concept very different from the injection of capital,” as the banking supervisor points out. However, they have meant for the entire Spanish financial system an amount -in guarantees to certain assets- of more than 35,681 million euros , which can lead to losses as time passes. So far, and according to official data, the expected losses already reach 6,506 million euros, “which are provisioned in the financial statements of the FGD and the FROB”, both institutions with the final guarantee of the State.
Greater still is the invoice of the schemes of protection of active according to the last calculations published by the Service of Studies of the Caixa, that in a report of January estimated in 42,000 million the total of credits and immovable protected by the Fund of Guarantee of Deposits , and of which we expect losses of around 10 billion euros.
Guarantees and loans
The bank debt guaranteed by Spain exceeds 64,000 million, and the ECB loans 350,000 million The lines of public guarantees is another of the ways that the Spanish authorities have taken since the beginning of the crisis to assist the financial system. As the entities had in practice closed access to financing from abroad (for years the interbank markets remained almost closed) the State acted as the ultimate guarantor, so as to increase guarantees. Up to now , 48% of the loans guaranteed by the administration have been returned with interest .
The figures regarding public guarantees made available to banks and savings banks vary, according to sources. For the Research Department of La Caixa the amount of debt not due (that is, still in force) amounts to more than more than 64,000 million, while the Citizen Audit Platform of the Debt raises the amount to 110,000 million . They have also helped to maintain the liquidity of the financial system, the loans of the European Central Bank (ECB) which have amounted to more than 350,000 million euros , and which will have to be repaid.
Tax credits of more than 63,000 million
Fiscal assets allow to pay less taxes in the future for losses in the present Special mention deserve the assets and tax credits , a “help to the bank by the back door”, as defined by Carlos Sánchez Mato, of the Platform for the Nationalization of the Savings Banks. In total they represent more than 63,000 million euros that have been counted as benefits, and of which the State could end up being responsible.
As defined by BBVA itself, deferred tax assets are “taxes that must be recovered in future periods, including those derived from tax loss carryforwards or tax credits pending settlement”. That is, the entities that have suffered losses on their balance sheets have been allowed to reduce them by way of corporation tax that will be saved in the coming years (since the Treasury can compensate for the current losses with less taxes in the future ). That yes, it is essential that there are benefits in the future to be able to activate these tax credits.
The Spanish bank has used this tool massively as if it were its own capital, and the sector sources consulted by this newspaper put the total amount between 63,000 and 50,000 million euros . The problem is that the new rules that will be applied by international banking (norms known as Basel III) prevent these tax assets from forming part of the minimum capital required. That is to say, that without explicit public guarantee of those tax credits, the entities would have to obtain new capital (shareholders) for an equivalent amount.
The forced swaps of preferred and subordinated debt have injected 13,600 million in nationalized entities The Government, after months of negotiations with the entities, has reached an agreement to allow them to continue accounting as capital between 25,000 and 30,000 million euros, such as Voz Pópuli reported. In summary: tax privileges will be given to banks, which may not pay taxes based on their losses . The State will collect less to avoid new bankruptcies of the Spanish financial system.
The preferred ones, a private help
The imposition of losses on investors of preferred shares and subordinated debt is another aid, in this private case, which has helped to recapitalize financial institutions in trouble. With the euphemisms of a “management of hybrids” and a “burden sharing” and the excuse of reducing the cost to the taxpayer, the European Commission forced the nationalized savings banks to convert their preferential shareholders into forced shareholders, also applying losses in the exchange of up to 73% of the investment.
The total cost, according to the estimates of the FROB itself, is that the owners of preferred and subordinated debt have contributed 13,600 million euros to recapitalize the Spanish financial system . These new and former shareholders are, however, those who “have assumed most of the bailout”, in the opinion of Professor Joaquín Maudos. According to their estimates, the entities have dedicated more than 250,000 euros to provisions since the beginning of the crisis; these write-downs have been charged against reserves, which explains the poor performance of the sector in the stock market since 2009.