Loans to large companies fall by 32%, despite government optimism

Loans to large companies fall by 32%, despite government optimism

Despite the optimism of the Government, the granting of new credit to companies continues to fall. The latest data from the Bank of Spain of new operations in the business sector recorded an average decrease of 20.01% in February on a year-to-year basis, to 25,418 million. The regulator differentiates between credits up to one million euros and from that figure. In the first case, statistics show an increase of 5.98% (10,694 million) in February on a year-on-year basis, which could be interpreted as the beginning of the flow of credit in small and medium-sized companies. On the contrary, the granting of loans in excess of one million euros, it is understood that large corporations plummeted 32.11% in February on an inter-annual basis, to 14,724 million. In addition, the series of new loans is contaminated by refinancing, novations, and changes in the terms of contracts, which are included. Last week has seen companies like the construction company FCC have refinanced a loan of more than 4,500 million. That is, not all are new loans, even if they are accounted for as such. Or other companies such as Martinsa, Colonial or Eroski, which continue to renegotiate their syndicated loans against the clock in order to avoid being liquidated or in a bankruptcy situation, as the case may be.

To that reality we must add another: that is part of a very high stock. The repayments (cancellations) are greater than the new amounts granted. Result: the net balance does not increase. Even before the crisis, the stock grew and grew because the rates of granting new loans to companies and families were always higher than what was amortized.

In this sense, it shows that the credit does not pick up is that the indebtedness of the companies or the historical outstanding balance (stock) of loans granted by the banking sector to the business sector decreased by 11% in February, to 636,138 million, without counting the flowing cash (discounts, amortizations …).

The experts ask: how to make compatible the correction of the excess of indebtedness of certain sectors and companies (the so-called deleveraging) with the provision of new credits to viable and profitable projects? Difficult to explain. Of that reality, the convoluted words of the deputy governor, Fernando Restoy, when saying that there are “signs that the rate of credit decline in Spain is stabilizing”, a condition to begin to see that credit begins to stabilize its levels and leaves to fall

Most of the bankers defended last week in a conference in Madrid that their financial institutions are ready to give loans to viable business projects, but none offered data of this segment. From Javier Marín (Santander) to Ángel Cano (BBVA) to Jaume Guardiola (Sabadell) and even José Sevilla from Bankia were quite optimistic. While Francisco Gómez (Popular) and María Dolores Dancausa (Bankinter) were more measured in the optimism about the return of liquidity. “The outstanding balance or stock will not begin to grow, as soon, until 2015,” Cano said.

Guardiola, and some other banker, also stressed that “it is a priority” to accompany the companies in the export process since many of them are going out of Spain to sell their products.

For its part, the Government begins to send messages that the credit returns. But on what data is it based? In which the new credit granted to families in recent months sees some rise.

According to the latest data from the Bank of Spain, the new credit granted to families grew by 17,22% last February, compared to the same month of February 2012, to 4,545 million. By sub-sector, mortgage loans increased by 25.76% in the same month, to 2,021 million, and consumer credit increased by 32.48%, to 1,244 million. On the other hand, new credit for other purposes fell by 3.83% to 1,280 million.

These percentages and those of some previous months are what gave rise to the Secretary of State for the Economy, Fernando Jiménez Latorre, to say that “families and companies will soon notice access to credit”. He predicted that consumption “will rebind throughout this year” and indicated that “the recovery will be more balanced”.

According to a financial expert, one can not forget that part of very low figures last year, when the bank granted mortgages “almost with droppers.” In fact, the new credit to families during the crisis (from 2009 to 2013) fell by 70.12% to 21.853 million.

When analyzing the historical indebtedness (stock or volume) of the families, the same thing happens when reviewing the business: the amortizations, especially the cancellation of mortgages, exceed the granting of new loans, with which the net balance does not rise. The volume of loans that families owe to the bank amounts to 777,801 million, 5.51% less than a year ago. Hence the hackneyed phrase that families are also deleveraging. However, most of its debt (606,774 million) corresponds to mortgages. That is, families, continue to pay their mortgage religiously, as much as possible, but they think very much about applying for a new loan to pay for a trip or the communion of the child, as they did in the good years.