Concern about the lack of credit to SMEs

A serious and logical concern emerges from the Troika’s questions to Spanish banks due to the prolonged lack of loans to SMEs – small and medium-sized companies. Something that continues to create concern about the lack of credit to SMEs.

Recapitalization raises concern

Recapitalization raises concern

It is logical that this raises concern because despite the recapitalization effort of the banking system, which was promoted by the troika (European Central Bank, International Monetary Fund and European Commission) and which became concrete with a credit line of up to 100 billion dollars , and that precisely had as one of its main objectives the consolidation of balance sheets and the facilitation of the outgoing flow of credits to small and medium-sized enterprises. Until the present failure flatly. This is demonstrated by the accounts, credit is stagnant and is vital for the recovery of the economy and to sustain it, until well into the coming year.

The risks of lack of credits

The risks of lack of credits

Faced with such a scenario, there is a risk of falling into the crossroads of sterile accusations when the root of the problem that banks have today is not understood. That the Spanish banks invoke the recession to give an explanation in order to justify the absence of investments and, in addition, that the companies point the finger that the banks in order to save accounts and clean balance sheets have restricted credits.

Currently, Spanish banks are faced with three uncertainties – which the IMF and the ECB will certainly detect and evaluate – that prevent them from successfully exiting the first round of recapitalization and recovering normalcy in credit. The doubt about the conversion of banking tax credits into capital is the first, if this possibility were denied, banks will have to face a problem of a certain magnitude.

The second of the uncertainties is related to the refinancing of the credits , some of which are doubtful and even uncollectible, which logically forces them to make new adjustments and more provisions in the accounts. As was to be feared, the persistent recession has generated an increase in non-performing loans, which leads to more difficult times for banks to overcome: the stress tests that the ECB is preparing for them in early 2014.

The banking system is in need of another recapitalization

The banking system is in need of another recapitalization

Those who maintain that the recapitalization ended with the problems of the Spanish banks, do nothing more than err on the side of excessive optimism. Given the uncertainties mentioned above – plus the addition of others no less relevant, such as the stagnation of margins or the sale of the Catalunya Banc or NovaGalicia – the idea that the banking system is in need of another recapitalization strengthens. Situation that would only shorten the string of debt and deficit

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