The great Spanish banking has granted loans outside the lines guaranteed by the Official Credit Institute (ICO) to companies and self-employed workers for an amount of at least 26,000 euros. These are data that emerge from the presentation of the results of the first quarter of some entities and of consultations carried out by the ACN in the different banks. According to the figures collected, CaixaBank leads the granting of loans outside the ICO lines to the State, with operations totaling approximately 14,000 euros. However, other entities such as the Santander or he BBVA they have also launched large lines of funding – up to 20,000 euros and 25,000 euros each – with the aim of mitigating the economic impact caused by the coronavirus crisis.
According to the latest available data, the amount of loans without the ICO guarantee granted by CaixaBank is higher than the amount of the credits that do have the guarantee. As of April 23, the third largest bank in Spain by volume of income had received almost 129,000 applications for ICO loans for 11,100 euros, a considerably lower amount than the lines without guarantee (14,000 euros). In fact, in mid-March, CaixaBank announced the launch of a 25,000-million-euro line of credit for more than 440,000 self-employed workers, 115,000 micro-enterprises and 52,000 premiums.
At Banco Santander, the situation is very similar. Until 22 April, the bank of Cantabrian origin granted around 176,000 loans outside the ICO lines worth 12,000 euros. In fact, during the presentation of results for the first quarter, the president of the bank, Ana Botín, remarked that Santander had granted more than 1,100 euros a day to SMEs and companies during the first weeks of April. Within the lines endorsed by the Spanish government, however, Santander has granted 9,600 euros in 60,000 operations, according to the latest data updated to 22 April.
The rest of the large state entities have not specified the amount of loans they have granted outside the ICO lines. However, the experts consulted by the ACN say that the value of the credits granted without the state guarantee far exceeds the amount of the credits guaranteed by the ICO. In addition, banks have launched major initiatives to continue financing companies and the self-employed without taking into account the sections that the central government has been approving. BBVA is a good example. The entity based in the Basque Country launched a line of financing of 25,000 euros for SMEs and the self-employed in mid-March. At the same time, it was one of the first banks to distribute its share in the first tranche of loans guaranteed by the ICO – it ran out in two days. Finally, between January and March, the group increased its granting of financing to companies worldwide by 10,000 euros (Spain represents approximately 20% of its revenues).
Sabadell, meanwhile, has managed at least 61,036 transactions for an amount of 5,384 euros, while Bankia has received applications worth 7,320 euros. Although Bankia has not specified the number of loans granted outside the ICO lines, the institution noted during the last presentation of results that it had launched a line of bridge loans for all those companies that had not yet been able to obtain the loan. endorsement of the ICO (without specifying the amount). Finally, Bankinter managed loans for 3,284 euros and its loan portfolio during the first quarter increased by 700 euros.
Guarantees that fall short
According to the latest data presented by the Ministry of Economic Affairs and Digital Transformation, the ICO has registered 371,070 transactions until this Wednesday, May 13, with guarantees amounting to 36,291 euros and a channeled credit flow of 47,751 euros. However, experts point out that these figures are not enough to meet all requests for funding from companies. “The demand for guaranteed loans far exceeds the availability of guarantees,” says Benja Anglès, professor of Financial and Tax Law at the Universitat Oberta de Catalunya. For English, “liquidity needs are very high,” which is why banks offer alternatives outside the ICO lines.
On the other hand, this professor points out that “the granting of guarantees is being lengthened”, either for bureaucratic reasons or because a bottleneck is difficult to assume. In a telematic event organized this Friday at the Círculo Ecuestre, the CEO of Banco Sabadell, Jaume Guardiola, put figures on the current situation: “the credit operations that we used to do in half a year, now we do in a month,” he said. . Finally, it is important to highlight the importance of bridge loans, a formula that allows companies to receive financing immediately while waiting to receive the approval of the ICO.
The prudence of banks
Over the last few days, uncertainty about the economic situation has only increased. Faced with this situation, however, banks continue to give credit and expose themselves to risks. According to Xavier Freixas, Professor Emeritus at Pompeu Fabra University, “banks often maintain a long-term relationship with companies that do not want to damage, and will now make loans that they would not make to a newcomer.” Nevertheless, experts believe that banks have learned the lessons of the previous crisis and are aware that offering loans is now better than refusing to do so. “What they are trying to do is keep business in business so that everything returns to normal; to do otherwise would mean that these problems would force many businesses to close and banks would have no one,” says Anglès.
Given the current uncertainty, however, it is logical for banks to impose higher interest rates. Seeing that the state offers great guarantees and that institutions can charge higher interest rates to protect themselves from uncertainty, some voices might ask the following question: Is the crisis good for banks? For English, the increase in lending is not enough to offset the concerns of the sector. “The context doesn’t allow anyone to be quiet, because the scenario is one of total insecurity.”
The success of the strategy adopted by the banks will be seen from next year, when the exemption from the payment of loans guaranteed by the ICO ends. From then on, banks will have to pay attention to the evolution of their delinquency ratio, a ratio that institutions have managed to place below 5% after a financial crisis that catapulted it to 13, 5%. According to UPF professor Xavier Freixas, “an increase in delinquency of less than 2% would not be a problem, but an increase from 3% onwards”. That the credits can finally be returned, according to Freixas, will largely depend on demand. “In the end we don’t know which companies will survive because our behavior as consumers will change,” he points out.