January 23, 2021

Banking loses 18% of its margin due to negative rates | Economy

The banks that support negative types they suffered a fall of their intermediation margins of 18.4% compared to those that do not, calculates a study of Funcas in which 3,155 entities from 36 European countries between 2011 and 2018 have been examined. Moreover, in the most important economies of The EU, which includes Spain, shows even more margin reduction: 26.4%. And those with a higher deposit base are more affected, he says.

The service of studies of the old savings banks reviews the studies on the impact of negative rates, and concludes that, with interest rates that are equal in the short and long term, it is very difficult for banks to do business. And he points out that there are many more distortions: in order to achieve profitability, the funds and insurers take more risks. Having no alternatives, the big fortunes are concentrated in real estate inflating prices. In short, according to Funcas, the negative rates served to get the economy out of the crisis, but maintained over time they lose effectiveness. In fact, it stands out that a decade later the credit is still not going up. And the emergence of shadow financing providers is encouraged.

Although he admits that it is now difficult to get out of those guys in full slowdown, he stresses that it is important that there is a long strategy to get out of them. Otherwise, they negatively influence expectations by conveying a sense of stagnation. They also prevent the renewal of the business park by facilitating the survival of zombies. Funcas will forward the study to the ECB for consideration in your internal debates.


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