The Mutation of Spanish Banking: Profitability, Branch Closures, and Tax Havens

By GERMÁN GORRAIZ FOR CANARIAS-SEMANAL.ORG.-

According to the agency EFE, the great Spanish banking (Santander, BBVA, CaixaBank, Sabadell, Bankinter and Unicaja) would have obtained in the first half of 2023 and net profit of €12,566 million (22% more than in the same period in 2022), thanks to the onerous increase in commissions and interest on loans as well as the incessant trickle of branch closures.

Despite this, the big banking affirms that profitability continues to be low as it does not cover the cost of capital of the sector, an argument by the banking establishment to reject the tax created by the Government consisting of applying a rate to the extraordinary income of the Bank obtained by the increase in interest rates. BCE.

The mutation of Banking

Traditionally, the purpose of banking was to channel private savings into investment, but given the absence of a culture of domestic and public savings, the provider of resources to boost the economy in the form of investments has been transformed into a blood-sucking parasite. that sucks all the udders of the State to satisfy the insatiable appetite of its shareholders and senior management positions.

Likewise, the banking ruling caste would have been transmuted into a power clique (equivalent to a mini-state within the State), which would use nepotism to perpetuate itself in power for life, resorting to the so-called “armored contracts” to ensure a golden retirement. .

Finally, they will not hesitate to settle their assets in tax havens (offshore centers) to escape the tentacles of the Spanish Treasury. Thus, according to a report prepared by the Corporate Social Responsibility Observatory, 33 of the 35 companies that make up the Ibex had a presence in said tax havens, (which represents 94% of the companies that operate in the Spanish selective), it being no coincidence that Banco Santander leads the ranking of companies in sayings tax havens, followed by BBVA.

Banking in emptied Spain

The paranoid obsession of Bank to optimize resources would have led them to retire thousands of workers early and close countless branches and according to the Bank of SpainBetween 2026 and 2021, the Bank would have closed a total of 9,700 workshopsmost of them corresponding to emptied Spain.

As an example, in Navarra since 2008, 41% of the branch network has been closed, with which nearly 42,000 people from 145 municipalities have been condemned to a digital limbo. Thus, 6.3% of clients would be elderly and digitally illiterate who would have to travel more than 20 km to carry out their transactions and resort to third parties to use ATMs, with special incidence in the Pyrenean valleys of Aezkoa, Salazar and Roncal due to its special orography and the added danger of winter viability.

Consequently, according to the Vulnerability Index in Access to Cash (IVAE), something more than 36.300 personas, (about 5.5% of the population of Navarra), would be in a “vulnerable situation” with respect to traditional access to cash, a situation that can be extrapolated to the rest of emptied Spain.

The greed of the Bank

The drop in interest rates to 0.15% and the continuation of the ECB open bar policy (LTRO) They alleviated the liquidity problems of financial entities and facilitated the accumulation of reserves. Consequently, banks do not have an urgent need to raise liabilities, which is why they report interest in the range of 1% to 2% for the money deposited, while there has been a tightening of the conditions for future loans, with a rate average interest on personal loans of 8.24% according to the Bank of Spain.

Likewise, runaway inflation in the UE has led to the increase in interest rates by the ECB to 4.5% in 2023, which will make the Euribor flirt with 5% at the end of 2023. This will have an immediate impact on mortgages and bank loans, resulting in economic asphyxiation of broad social strata and a dramatic increase in delinquencies and foreclosures of homes and commercial premises.

German Gorraiz Lopez

-Analyst.

Original title: The mutation of Spanish Banking