Pablo Hernández de Cos, governor of the Financial institution of Spain, warns about the exposures of Spanish banks in Latin America, because the financial efficiency of the area could have a “crucial” affect on the stability of Spanish banks.
The exposures of Spanish banks in Latin America symbolize, with information previous to the pandemic, nearly a fifth of the full exposures of the banking system and near 30% of the exposures outdoors of Spain. On this sense, De Cos has warned that the dangers derived from these exposures can probably develop into systemic.
The area of Latin America and the Caribbean has been considerably affected by the Covid-19 pandemic, each in well being phrases, with greater than 650,000 deaths because the starting of the pandemic, and in financial phrases, with a projected fall in Product Gross Home (GDP) of seven.4% in 2020 and a progress of 4.1% in 2021, in line with information from the Worldwide Financial Fund (IMF).
On this context, De Cos has highlighted the deployment of financial insurance policies, which had been “essential” to mitigate the influence of the well being disaster. Mentioned insurance policies consisted primarily of extraordinary gadgets to strengthen well being methods, in addition to liquidity assist applications and deferral of cost for companies, amongst others.
Likewise, the central banks lower rates of interest to historic minimal ranges in all instances and, in line with the governor of the Financial institution of Spain, all these measures have helped forestall the principle indicators of probably the most related Latin American banking methods for Spanish banking. have deteriorated considerably.
“For now there has solely been a sure drop in financial institution profitability because of the discount in rates of interest, decrease commissions and better provisioning to face this unfavorable scenario,” De Cos identified.