The results of the general elections held this Sunday, July 23, have drawn an uncertain outlook. The two most voted political forces have not achieved a sufficient majority to form a government. The popular ones, who started out as favorites in the polls, have not been able to materialize these numbers, while the socialists could form a government if they had the support of Sumar and the rest of Congress, with the exception of popular ones and Vox. And the latter has been a jug of cold water for the banking sector.
Precisely, bank prices are being the most affected by this new post-electoral scenario that is torn between the current continuity or the political blockade. If the former happens, that the leader of the Socialists, Pedro Sánchez, ends up forming a coalition government with Sumar, it could lead to a more tense legislature for the banking sector both due to the remuneration of deposits and the extension of the Code of Good Practices, along with the possibility of making the extraordinary tax permanent.
In relation to the first, both Socialists and those of Yolanda Díaz contemplate regulating the remuneration of deposits after the banks have not transferred with the same intensity the rise in interest rates to fixed-term deposits. “A mechanism will be established to link the interest on deposits to the interest on loans. This will avoid both oligopolistic practices and eventual deposit leaks that could cause a liquidity crisis in financial institutions,” Sumar’s electoral program includes.
It is true that, little by little, the profitability of deposits has been rising, reaching 1.40% in the month of May. But a judgment of politicians is still insufficient. First, because the deposit facility rate stands at 3.50%, although it could climb to 3.75% this Thursday if the European Central Bank (ECB) raises interest rates. On the other hand, the deposit gap with respect to Europe remains uncorrected. The average profitability of these products in the Old Continent stood at 2.20% in April, the latest data published, although in France, for example, they exceed 3%. And this could lead to the interest on deposits being regulated to bring them closer to the yields of the types of loans.
Before the elections, the acting Minister of Economy, Nadia Calviño, had asked the National Competition Market Commission (CNMC) and the Bank of Spain to prepare a report on the low remuneration of fixed-term deposits, to detect if there are competition problems. In this sense, the socialist document will promote “where appropriate, investigations and actions that ensure effective competition in the banking market.”
Code of Good Practices and Taxes
Another of the issues that a new coalition government would work on is reforming the Code of Good Practices so that more mortgaged people with problems despite the fact that banking associations (AEB and CECA) such as the Bank of Spain oppose it, considering that it is still early days and that the volume of applications is not meeting expectations. In the case of the Socialists, the idea they defended in their electoral program is to increase the income that mortgaged people with problems could take advantage of.
Therefore, the revision of the Code of Good Practices would consist of extending the term of mortgages for rentals of up to 37,000 euros by 7 years, which would allow the middle classes to take advantage of it and not only vulnerable families. If finally, the PSOE forms a coalition government with Yolanda Díaz, the latter could press for the extraordinary tax on the banking sector to be permanent, since her program is the payment of 1,000 euros for mortgaged people with problems, which would mean an expense of 1,000 million paid exclusively through the tax.
Caixabank would continue in the hands of the State
As for the participation of the State, through the Frob, in Caixabank, whose shares are left with slightly more than 1%, there were no express mentions in their political programs, but Yolanda Díaz opened the door for the State to continue maintaining participation in the entity chaired by Jose Ignacio Goirigolzarri. In addition, she brings him huge benefits, via dividend. In April 2023, the State arcades entered 300 million through this item.
