AEB warns of the risk of another systemic crisis due to the advance of shadow banking

Santander, Jun 24 (.) .- The president of the Spanish Banking Association (AEB), José María Roldán, has said that the displacement of activity from banks to the “shadow financial system” may be increasing risks of financial instability, including the probability of another “systemic crisis”.

Roldán, who has intervened this Thursday in Santander in the course of the UIMP “Perspectives of the Spanish and European economy before the new reality”, organized by the APIE, has wondered what use it is to have made banks safer from the from the view of solvency and liquidity, “if we are shifting risks to a part of the financial system that is poorly regulated and supervised.”

It has warned that this shift in activity from banks to the “shadow financial system” may even lead to another systemic crisis appearing due to “the presence of ‘pseudobanks’ outside the regulatory perimeter.”

Roldán recalled the role played as accelerators of the crisis by non-bank operators such as insurance companies (AIG), securities companies (Lehman Brothers), money market funds, investment structures (SIVs), or companies specialized in the coverage of the risk of default (monolines).

He added that, although the COVID crisis has demonstrated the resilience of the banking sector, “there are well-founded doubts that financial stability has been guaranteed with a highly strengthened banking core, but with an absolutely uncontrolled periphery.”

The president of the banking association has cited recent examples, such as those of Wirecard, Greensill or Archegos.


In Roldán’s opinion, “the financial system seems to be entering, hand in hand with the banks, in the shadows, in a stage of dangerous anarchy and disorder.”

“Rigorous, neat and severe regulations and supervision of the banking sector are of little use, if the activity in areas of the shadow financial system, which is currently superior to the activity of regulated banking intermediation, is carried out by operators subject to a lower regulatory requirement and a lighter or more distant supervision, not to say non-existent, “he added.

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In addition, he said that in this new financial world “the banking sector has the upper hand” and, for example, banks must share their clients with new payment operators, but the ‘bigtechs’ are not obliged to share this data.

On the other hand, Roldán recalled that during the COVID crisis, banks were “an essential part of the solution” and recalled the million credit operations that were made during the pandemic, the almost 700,000 financed companies and the 100,000 million euros of funds that were channeled to guarantee operations.

“Without the sector there would have been no solution,” said Roldán, who stressed that he is getting out of the pandemic and that there is “no problem of financial stability.”

Regarding mergers, he pointed out that in Spain the possibilities of new operations are less and less, so it would be necessary to think about doing them on a European scale, but these do not occur because the synergies are not yet “sufficiently relevant” and because there are regulatory costs linked to national elements.

However, he has said that he would like to think that cross-border mergers will be unblocked in the coming years.

Regarding the reductions in the banking staff, he pointed out that they respond to a lower demand through traditional channels and to greater competition, as referred to above.

As for the ERE, the president of the banking association has trusted that the entities in which they are still negotiating will reach agreed solutions and that there will soon be agreements.

With regard to the remuneration of the directors of Spanish banks, it has indicated that they are not above other companies of the Ibex 35 or those of European banks.

In addition, he has said that there has been a “trend towards moderation” and that he does not know of any sector, apart from banking, in which executives of companies that have gone bad have to return even the ‘bonus’ they received three years ago, to For some time, he has defended that where the remuneration of directors and directors should be discussed is at shareholders’ meetings.

He has also regretted that what he called “contradictions” of negative interest rates has come to stay, since it has become a permanent element, which he considers negative, since it penalizes savings, which is a “sacrifice.”

(c) . Agency

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