MADRID, Nov 22 (Reuters) – Two prime Spanish bankers on Tuesday stated Spain’s mortgage reduction plan may result in a rise in unhealthy debt provisions and weigh on banks’ capital reserves.
The Spanish authorities and the nation’s banks on Monday reached an settlement in precept on mortgage reduction measures, resembling extending mortgage repayments, for greater than 1 million susceptible households and on assist for middle-class households.
The deliberate measures are a part of a wider bundle of assist to assist ease value of dwelling pressures.
“A number of the measures have an effect on the provisions, because it can’t be in any other case, as quickly as an extension (is agreed) there are all the time components that have an effect on the provisions,” Santander (SAN.MC) CEO Jose Antonio Alvarez instructed reporters on the sidelines of a monetary occasion.
Alvarez stated that even small adjustments in how a possible mortgage refinancing or extension is finished may have an effect on capital consumption associated to the financial institution’s mortgage loans.
Sabadell (SABE.MC) CEO Cesar Gonzalez-Bueno additionally on the sidelines of the occasion stated the federal government plan should not hurt banks an excessive amount of.
“There should be a strategy to discover equilibrium to assist decisively shoppers who want it and do it with out harming banks’ accounts excessively,” Gonzalez-Bueno stated.
Sabadell would signal the code in precept relying on the final particulars, Gonzalez-Bueno stated.
Alvarez added that Santander had nonetheless not signed off on the mortgage assist settlement although it deliberate to take action. Some technical features have been nonetheless being mentioned resembling how one can classify shoppers’ loans, he stated.
Santander CEO additionally stated care should be taken to make sure that the assist measures don’t make entry to loans tougher.
“As soon as a buyer is classed as stage 3 (loans thought of as impaired) due to a few of these technical features, shoppers have an issue sooner or later, which is that it’s tough for them to entry credit score,” Alvarez instructed reporters.
Reporting by Jesús Aguado and Emma Pinedo; Modifying by Inti Landauro, Jane Merriman and Mark Porter
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