Almost 100 billion capital has leaked from Spain during the first three months of the year, which equates to about one tenth of Spain’s gross domestic product (GDP), according to the central bank in Madrid, quoted by Financial Times.
The data confirm the claims of many economists that investors sell Spanish assets. Spanish banks do have increased their exposures to sovereign debt, after being supported by the European Central Bank (ECB) under the three-year emergency loans it lent to banks in the euro area twice last year.
“My fear is that these are not actual data. We have not yet seen the latest numbers, but they can show that the situation is even worse, “said the magazine Raj Badino, an economist at IHS Global Insight. “We are witnessing a perfect storm,” he said.
Meanwhile, ECB President Mario Dear accused the Spanish banking supervision that he had underestimated the amount needed to save the credit institutions in Spain. He said a good example of saving the Franco-Belgian bank Dexia.
The publication notes that the Spanish government last week announced it will inject another 19 billion in the third-largest bank in the country Bankia, which is experiencing the most serious difficulties because of the amount of problem loans. The rescue of the financial institution will cost the Madrid total 23.5 billion euros, calculated authorities.
In February, however, Spain announced that it has no public funds to recapitalize banks in the country. I recently went informed that the government plans a new issue debt to raise money, but European authorities opposed the idea.
According to Mario dear lesson of Bankia situation is that oversight of risk banks, which destabilize the whole system should be implemented by a central authority rather than by national regulators.
Strengthening the European banking regulator who now rely on national authorities to interact with individual banks could ultimately lead to the formation of pan-European rescue fund for distressed financial institutions, the newspaper notes.
This idea is defended by bankers from peripheral Member States of the eurozone. Some European politicians are also seeing more powerful European regulator as a vital prerequisite for the sharing of financial responsibility, including support for troubled banks with funds from the permanent rescue fund of the eurozone.
Dear Mario calls for greater centralization of the banking sector is likely to face serious resistance, the newspaper. Moreover, the European body is currently struggling with harsh criticism because of bank stress tests conducted.