Spanish banks recorded an outflow of deposits in the first five months of the year for almost a period of time since 1997, the date on which the historical series began. This data contrasts with the growth of 18,255 million euros experienced for the same period of 2022
However, the decrease in the liabilities of Spanish banks has lost intensity at the beginning of the second quarter of the year compared to the first three months. A slowdown that coincides with an improvement in the remuneration of fixed-term deposits. THIS FIGURE WOULD BE EQUIVALENT TO A LITTLE MORE THAN THE DEPOSITS THAT BANK SANTANDER WOULD HAVE AT THE CLOSING OF THE QUARTER FOR ITS BUSINESS IN SPAIN (WHICH WERE PLACED ABOVE 310,000 MILLION EUROS) OR ALMOST A THIRD OF THE DEPOSITS FROM BANK SABADELL CLIENTS.
Spanish banks had been increasing their deposit base for several years despite the fact that ECB rates are negative. In 2020, in the midst of the coronavirus pandemic, financial institutions saw their volume of deposits skyrocket by 53.7 billion euros. It would be necessary to go back to 2018 to find outputs of fixed-term deposits, but with volumes far from the current ones. In that year and for the first five months, the output stood at 10,019 million euros.
Although similar data correspond to the deposits of Spanish banks, the European supervisor found that these dynamics have been for the rest of the European banking sector with most banks experiencing a similar trend: a reduction in the first half of the year in ITO deposits , which have been transferred to other products such as off-balance sheet assets.
Funds, amortizations and fixed income
Where have these almost 56,000 million euros gone? The truth is that this money has not disappeared and Morningstar experts identify three ways out. To begin with, a large part of these deposits has remained in the bank, since clients have noticed the resources out of balance of the entities, that is, increasing their presence in investment funds. Bankinter also showed that the decrease in the balance in payroll accounts lived in the first three months coincided with the growth in these products. This message has been defended by the executives of the main listed entities, who have insisted that they are offering their clients alternatives such as savings funds and insurance, which provide greater added value. But the money has also gone to Letras del Tesoro, where individuals have raised their short-term holdings of State paper to more than 13,000 million euros, according to the latest data from the Bank of Spain.
Another important part of this volume in deposits has been used to pay off a mortgage on the Euribor scale. It should not be forgotten that since the ECB began to raise interest rates, a year ago, the reference index for most variable-rate mortgages has been rising, until breaking the 4% barrier at the monthly closing in the month of June. This increase implies that the mortgage payment has become more expensive on average by around 300 euros per month or 3,600 euros per year. And this is leading to anticipate payments. Proof of this is that the outstanding balances of mortgage loans have been reduced by 8,326 million euros in the first five months of the year. Finally, this outflow of deposits has also been used to offset the loss of purchasing power due to the increase in inflation
High levels of liquidity
Despite this flight of deposits, Spanish banks still have a significant base. At the end of May it was 1.66 trillion euros, although the highest balance shot up in June 2011, when the volume was close to 1.8 trillion euros. A figure that dwarfs the 400,000 million euros of 1997, at the beginning of the historical series. Precisely these figures serve to ratify the high liquidity that Spanish entities have.
In this sense, Morningstar insists that these figures only confirm that the main reason behind the low interest rates on deposits in Spanish banks is related to a large and stable deposit base, which has low sensitivity resiliency to changes in interest rates.