De Guindos disapproves of banks and applauds Hernandez de Cos for raising the countercyclical capital buffer to 1%.

Vice President of the European Central Bank (ECB) Luis de Guindos, believes that the decision of the Governor of the Bank of Spain, Pablo Hernandez de Costo raise to 1% countercyclical capital buffer For lending institutions, this is correct and considered very useful to understand the difficult context that awaits banks after the planned fall in interest rates in June and the geopolitical risks associated with the conflicts in Ukraine and Israel.

“This the right decisionBecause “it takes into account the good situation in terms of profitability that Spanish banks are in,” Luis de Guindos said at an event organized by IESE and FTI Consulting. In his opinion, the anticyclic cushion is “very good tool” because it takes advantage of the good times and therefore allows us to respond better when tougher times come when the cycle begins to decline.

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These statements contradict statements made by some officials of Spanish banks, such as the CEO of Bankinter, Gloria Ortizwho criticized supervisors’ “appetite” to ask for “more and more capital” and believes that raising capital requirements by 1% “This will not stop the bank from going bankrupt.” In his opinion, the level of capital that banks now have “There are more than enough of them“

A new formula developed by the Bank of Spain forces banks to allocate almost 7.5 billion eurosbetween 2025 and 2026 to strengthen its solvency and represent countercyclical capital buffer (CCA) to cope with difficult situations that may arise in the future.

This is about macroprudential instrument strengthen the solvency of the banking system during credit growth stages, when it would normally accumulation of risks. That is, it allows you to smooth out fluctuations in the credit cycle, accumulating capital in good times so that it can be used if the economic situation worsens.

The goal is to create 0.5% percentage of countercyclical capital buffer as of fourth quarter 2024which will apply from 1 October 2025 and will be required of companies for their risks in Spain.

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Going forward, if cyclical systemic risks remain at intermediate levels, the Bank of Spain will rise to 1% this percentage from the fourth quarter of 2025, which will apply from October 1, 2026.

Towards hostile takeover Presented by BBVA at Banco Sabadell, Luis de Guindos said the ECB supports banking consolidation in Europe between banks of different Eurosystem member countries: “We are for consolidation in Europe, but always favorably or with a very favorable vision that cross-border consolidationsbetween banks of different nationalities,” he said.

In his opinion, the consolidation of the European banking system is held back no banking union and a full capital markets union, which “does not help in terms of valuation and in terms of institutional investors’ understanding of what European banks are about.”

The Vice President of the European Bank is optimistic about the economic growth eurozone and acknowledges that it will gain strength in the coming months.

As for inflation, which remained at 2.4% in April and the core figure fell to 2.7%, he believes that in the coming months “it will fluctuate around these values” and that in 2025 will converge in the direction 2% target what the European Bank noted. However, he believes there are risks that could prevent this goal being achieved, including the “evolution of wages.”