Los tipos negativos no les sienta nada bien a la banca europea, y en particular, a la italiana y la española…
They really don’t know what they are doing: QE and Spanish banks
I wrote on how negative rates are destroying the Italian banking system (here). Now, there is a new piece by Exane (here, via valueandopportunity) on how negative rates might play out in Spain. Unsurprisingly, the effects are similar.
Just as in Italy, Spanish banks have heavily invested in government bonds in order to benefit from the free central bank put provided by QE and whatever it takes. Just as in Italy, private sector lending has been crowded out (it probably was too high to begin with) and, just as in Italy, the low hanging fruit has been picked, now that Spanish government bonds yield less than the 10 year US treasury.
The report is entertaining to read, but the most interesting information can be found in this table,
It shows what percentage of the respective bank’s profit before tax (PBT) comes from interest payments and capital gains in the sovereign portfolio. The percentage is lowest for Santander (SAN) and BBVA, as they have substantial operations abroad and had not engaged in foolish real estate lending to begin with. Nevertheless, their dependence on income from their sovereign bond portfolio is substantial. For others, the importance of the sovereign book is way higher. For the seven largest Spanish banks, on average, 93 (!!!) percent of pre-tax net income comes from gains and income on their sovereign books.
The report mentions that the average remaining duration of the sovereign book is between 3-4 years, which means that over the next half decade virtually all of the Pre-tax profit in the Spanish banking system will disappear, if interest rates remain where they are.
Macro economists, as employed by central banks, no doubt would answer that this is exactly the purpose: force banks to lend more and help the economy grow out of the high debt (circular reasoning being a requirement for a PhD in this field).
They forget that in order to lend more to the private sector a bank a.) needs equity and b.) needs to find enough suitable costumers.
As for the equity, most of the equity in Spanish banks consists of tax loss carryforwards, i.e. it is not really there and not available to cover losses – and everybody knows that. Everybody who is not a macro economist, that is.
As for the costumers, Spanish banks are losing their best and biggest clients to – you guessed it – the ECB and to the bond market. Ask yourself: why should big Spanish corporates (Inditex, Endesa etc.) pay the overhead costs for such unnecessary things as underwriting departments and bank branches, if they can pay near zero in ETF and central bank dominated bond markets?
Answer: they don’t.
Thus Spanish banks are trying to find costumers by tricking Spaniards into credit card debt with opaque zero cost offers. If the only way you hope to grow your loan book profitably, is to screw your costumers, I would say that this is neither the way to grow your economy, nor sustainable.
There is no conspiracy – central banks really do not know what they are doing.
Hoy habrá rebote inicialmente al calor de más QE por el Banco de Japón… Más estímulos que es lo que mola. Pero son pan para hoy y mucha hambre mañana. Abrazos,
PD1: No dejes de ver el estudio de Exane BNP Paribas sobre la banca española. Muy interesante que refleja la realidad bancaria de ahora…
PD2: Banco Popular anuncia recorte 2900 empleos y cierre 300 oficinas. Desde ampliación en mayo sus acciones pierden -50%. Mala cosa para el sector que sabe que cuando acuden a una ampliación es para perder dinero…:
Deutsche Bank suma y sigue, otra galleta del -3.8% ayer:
Verificado: pánico a que la exposición de derivados, que parece no están bien valorados, ni están cubiertos con suficiente capital…
Otro caso: los bancos italianos: llenos de mora y miasmas:
Es mucho miedo lo que hay por ahí…, esa sensación de quiebras bancarias sostenidas por las autoridades para que no cunda el pánico… ¿Hasta cuándo? Quizás aguanten unos meses más, pero el desenlace de varias entidades está en manos de los políticos…, ya que los inversores han tirado la toalla.
PD3: Interesante lo que cuenta Enrique García Máiquez sobre los largos sermones de los curas:
En la misa Ad Orientem (donde el sacerdote celebra mirando atrás), como espaldas y cogotes son bastante impersonales, el protagonismo era todo del sacramento; pero ahora, como las caras suelen ser tan singulares, surge, según el poeta, un excesivo protagonismo de la individualidad del sacerdote y la consiguiente tendencia a personalizar las homilías e, incluso, la liturgia. El colombiano Gómez Dávila ya había sentenciado con su puntería característica: "Los ritos preservan, los sermones minan la fe".
No debe de ser casualidad que el enfriamiento de la fe popular haya coincidido con las reformas litúrgicas y las homilías divagatorias. Todavía he visto yo en la Sierra de Cádiz los últimos coletazos de la sana costumbre de que los hombres aprovechasen la homilía para salir a echar un cigarro. Desde que dejaron de salirse, dejaron de entrar. Sería más considerado anunciar, cuando el sacerdote desee exceder el límite de un breve comentario a la palabra de Dios, una conferencia suya a otra hora distinta, y a ver quién iba. Soltárnosla a los que fuimos a misa es abusar de nuestra devoción…
