Banco Sabadell, Banco de Santander, CaixaBank and BBVA have launched extraordinary liquidity lines to anticipate the needs of SMEs as a result of the slowdown in economic activity due to the coronavirus.
The restrictive measures adopted to contain the spread of the coronavirus will cause, if not a stoppage, then a sharp slowdown in the economy. The drop in activity suggests a decrease in income and difficulties for companies, especially SMEs, in the sectors most affected by the pandemic, such as tourism, hospitality, transportation and services.
In fact, while waiting for the national and European authorities to take measures in this regard, Spanish banks have begun to offer their clients liquidity lines and other financial solutions in view of a rise in unpaid loans.
Banco Sabadell, for example, has implemented an internal plan by which it has ordered 3,400 managers of the entity to contact those businesses and SMEs that are its clients and may be economically impacted by the coronavirus crisis to find out their needs. financing in this situation and offer them alternatives to avoid a possible default situation. "The idea is to anticipate so that precisely that situation does not arise," the entity points out.
Among the solutions that the group chaired by José Oliu contemplates for its clients is, first of all, a liquidity line of 15,000 million euros for these clients. Now, if necessary, this plan also contemplates that the bank negotiate on a case-by-case basis an increase in the grace period in the amortization of the loans and even refinance or renegotiate the conditions of the loans granted.
Along these lines, Santander, the other financial group with the largest market share in the SME segment along with Sabadell, announced last Tuesday that it is making pre-granted one-year loans for 20 billion euros available to these companies to alleviate their financial difficulties. short-term cash. Now, the entity also announced that the bank is going to "analyze in detail any financing needs that its clients may have", which in the future points to measures such as renegotiations.
Caixabank yesterday announced 25,000 million in pre-granted loans to be repaid in two years for the self-employed, microenterprises and SMEs basically destined for working capital operations. BBVA, for its part, has also made 25,000 million immediately available to the bank's SMEs and self-employed clients.
With the announcement of these lines of credit, the country's large financial entities seek to communicate to their clients that in case of trouble, their entities have sufficient liquidity available to lend them. Now, sources from the financial sector explain to ABC that, beyond this liquidity, what is necessary and effective are the measures adopted in this regard by the national and European authorities.
The authorities, key
Specifically, the bank considers that along with these liquidity lines and financial solutions adopted by private banks, soft loans granted by public organizations such as the Official Credit Institute (ICO) and the European Investment Bank (EIB) will be decisive. as well as possible financing from multilateral organizations.
In this sense, it is expected that, within the battery of measures that the extraordinary Council of Ministers approves today within its shock plan, the Government will give the green light to new lines of credit from the ICO for the affected companies, in addition to possible tax holidays, all to avoid liquidity tensions in businesses.
What is sought to be avoided by facilitating financing for companies is, on the one hand, a wave of defaults, and on the other a credit restriction such as the one that occurred after the 2008 financial crisis. The assumption of risk in credit operations by of public organizations such as the ICO or state guarantees is simpler than approving a moratorium on the payment of credits, as Italy has just done.
Accounting regulations
What's more, the Spanish financial sector explains that any measure aimed at postponing the repayment of loans or encouraging financing in the current circumstances should be articulated through an adaptation of bank accounting at the European level.
The current regulations force entities to immediately increase their provisions in the event of anticipated client losses, which would automatically lead banks to be more restrictive when granting credit. Therefore, to prevent the credit tap from being turned off in a context of greater defaults, banks would need the European Central Bank (ECB) to relax the rule.
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