The Bank of Spain asks the banks to monitor the provisions and delinquency of ICO loans




Margarita Delgado, deputy governor of the Bank of Spain, is already thinking about the economic recovery and the financial sector after the Covid-19 crisis. But that does not mean that it gives banks a wide leg in their activity; quite the contrary, since it has urged the entities not to relax with the provisions and monitor the delinquency that the ICO credits.

“We must be cautious and monitor the repayment of those loans granted under the umbrella of the pandemic programs. Even more so because they are concentrated in the sectors most affected by the crisis ”, he highlighted in the XXVIII Meeting of the Financial Sector, organized by ABC and Deloitte with the sponsorship of the Appraisal Society.

Although he has indicated that assets under special surveillance have increased in recent quarters, they still remain at low levels. Although that does not mean that financial institutions can relax when trying to anticipate the deterioration of credits. The delinquency of the sector, moreover, has continued to fall throughout the pandemic and it has remained at controlled levels, especially thanks to the measures put in place to deal with the pandemic.

Along with all this, Delgado has also urged banks to be cautious with the coverage they carry out against bad debts. «Do not be in a hurry to reduce supplies until you have confidence that the loan portfolio evolves as expected, “he said, to delve into that they must be aware that the level of coverage remains at adequate levels at all times.

The deputy governor, likewise, has valued the decision adopted by the European Central Bank (ECB) to restrict the distribution of dividends in banking. A limitation that has now declined in line with the recovery, and that the leader considers was “necessary and efficient.” Closely related to this, he asked the union to continue strengthening its solvency position.

Thus the things, not everything has been claims to the sector. Delgado has commented that “The outlook is hopeful for banks” after the worst of the pandemic has passed. Positive messages about the recovery, but with messages of caution.

Sector concentration

The year 2020 was the year of mergers in banking. Caixabank and Bankia closed their operation, as has happened between Unicaja and Liberbank. Just yesterday the CEO of the Catalan entity, Gonzalo Gortázar, drew attention to the fact that it is logical that there are more operations in Spain.

Delgado has not defended this time the concentration of the sector; the Bank of Spain has traditionally been in favor of these decisions, a known position. This time it has come up against complaints about the reduction of banking competition. “The level of concentration is not worrying if we compare ourselves with other neighboring countries”, has commented.

“Internationally we do see a recent trend of pan-European business acquisitions rather than cross-border mergers. This generates more integration within the banking union, “he added. The reality is that banks, for the moment, still do not see cross-border operations as particularly attractive.

Beyond this, the deputy governor has defended that the banks have now raised their commissions, since it is the consideration for the provision of their service. In this sense, he has asked transparency in the communication to the client in the change of conditions and when it comes to transmitting that the cost is on the rise.

To all this is also added the digital revolution. Delgado has indicated that banks must decide what technologies to adopt, and how and when to do so.

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