The Supreme Court gives the reason to the banks and failure of the customer to pay the tax of the mortgage

The Bank of Spain considers that the risk to the Spanish banks for a sentence contrary to the Supreme Court in the tax of mortgages has disappeared. Since it is not a risk factor, in your opinion. But it works on include the number of lawsuits on their products as a risk that is relevant in their analysis that do value with magnifying glass other variables such as foreign exchange, late payments, or bonds.

The supervisor admits that the exclusion of their analysis of multimillion-dollar lawsuits against the banks in court by Spanish and european is a “gap” which must be remedied. “We will think how to cook it”, has been recognized by the directorate general of Financial Stability a day after the banking has been partly overcome in the Supreme court a bill of up to 16,000 million euros in claims. Last Friday, governor Pablo Hernández de Cos asked the magistrates in preserving the legal security of the mortgage market, one of the most important Spanish banks.

The supervisor has completed this assessment during the presentation of its financial stability report for the third quarter, which includes no reference to the risks that you pose to the solvency of the entities in the all-out war in the courts between banks and customers represented by their offices of attorneys. This risk has been qualified by the Government as a “systemic” in its allegations against the retroactivity of the claims of clients in cases such as the lawsuit against the indices corresponding to mrti mortgage.

In its place, highlights the growing risk that they are assuming the entities in regard to the granting of credits to the consumption, that from 2015 has grown 40% to 63.000 million euros, 5% of the total volume.

this Is the third notice further gives the supervisor in this sense, a warning that the entities compared to the indicate that measured their possibilities by getting to know your customers well or because the consumer credit has a relative weight is low in your business.

But the direction of financial stability stresses that this risk, understood within other more general which is the narrowing of margins of banks, highlighted by an increase of nonperforming loans that exceeds the 8% in the last year, particularly in the durable consumer goods.

Until June, Spanish banks won 10,000 million euros, 12.5% more. But what is certain is that the business purely banking entities will not grow in Spain (in fact its active low total 2.6%) and improvements in profitability come more for the relief of resources that need to be allocated through the provisions of the real estate loans poison accumulated in their balance sheets.

What is new is the acceleration of nonperforming loans in consumer credit is now growing at rates of 23% in its operations of greater volume, those of durable consumer goods such as car financing. To address this lack of payment, the branch of other ordinary goods and services grows 10 times less. The supervisor warns that banks should start now to cover the risk of this delinquency through provisions that will reduce the profitability.

Other risks

The Bank of Spain contemplates other types of risks that may affect the banking sector, as political uncertainty in Italy in October, has been moved to the risk premiums of other countries. The contagion has so far been limited but is concerned.

it Is time of a crisis more local. And that is the scenario exchange rate in emerging countries may be another risk for the banks Spanish, especially in Turkey and Argentina, where they operate, BBVA and Santander. The depreciation of currencies in these countries last summer has reached 50, impacting on the income statements of Spanish banks.

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