Luis de Guindos "There will be credit for SMEs and individuals"

For the minister, investors do not believe in Catalan secession

Guindos says that the bank will request 30,000 million to the ECB to lend “in competitive conditions”

Luis de GuindosThe Minister of Economy , Luis de Guindos (born on January 16, 1960 in Madrid) has been casting this summer today and not because the Spanish economy has experienced problematic situations or because of the volatility of the stock markets, as in previous years, for his possible appointment as president of the Eurogroup, position for which he received the support of the Prime Minister, Mariano Rajoy, and even Angela Merkel herself at the end of August. The interview was held in his office last Thursday, after the surprise announcement by ECB President Mario Draghi of the drop in the price of money to 0.05% and the purchase of assets. After his holidays in Marbella, he returns with energy to face the pending reforms of his ministry and the trips of the Eurogroup and the Ecofin. He has changed a good part of his team. movement unleashed by the departure of a secretary of state.

The words of the current president of the Eurogroup, Jeroen Dijsselbloem, have been very hard against his possible appointment …
Point number one: I will do what the president of the Government, Mariano Rajoy, says. Point number two: the Eurogroup is a very important institution, at the moment, because it is a unique forum for assessing the economic policy of the euro zone. And point number three: I have the utmost respect for the two presidents of the Eurogroup: both the current one, the Dutch Dijsselbloem, and the previous one, Jean-Claude Juncker. The new one will arrive when the Dutchman leaves …

If the Eurogroup does not come out, could it preside over the new Single Resolution Mechanism?
(…) I insist, I will not enter the controversy. The appointment of the new president of the Eurogroup will take place when the current president leaves office in June 2015 … I feel the utmost respect for him. The presidency of the new resolution body will also be an important position, but Spain is not thinking, now, in that position.

What do investors ask about the sovereignty issue of Catalonia?

What do investors ask about the sovereignty issue of Catalonia?

Investors and analysts see that Spain is doing its homework. Nobody considers secession in Catalonia to be probable because it is not a rational scenario, neither realistic nor possible. Catalonia is one of the autonomous communities that have taken advantage of the reforms of the central Government. It is perceived in the figures of unemployment, in the data of the EPA, in the affiliations to the Social Security, in the economic growth, in the flows of investment … It even counts on two of the main banking entities of the country.

He does not believe that what was announced on Thursday by Mario Draghi can raise alarms about the fact that the economy is worse …
Beyond the decisions that the ECB has made, I think there is concern because the recovery is fragile, it does not gain strength … Even though some analysts talk about the possibility of a third relapse in the euro zone, I am not so pessimistic … I think Germany will recover. Obviously, those that already have several quarters of growth very low are France and Italy and some countries of the center of Europe. I do not think we will have negative growth in Europe in any of the next quarters, but with an unemployment rate of 11% … You can see that it is difficult to grow with acceptable figures and that worries. It is essential to reach a pact of economic reforms. The emphasis should be on reforms. If a country reforms and grows, it is good for Italy, Germany, France …

It will be enough?

 

With the purchase of bank assets and mortgage bonds, the liquidity of the system will be boosted. The ECB has another important action this fall: the liquidity bar of up to 400,000 million to the bank. Two major auctions will be held before the end of the year. For banking it is a very interesting mechanism, both from the point of view of cost and terms. We expect that Spanish banks will request a volume of around 30,000 million euros, which represents three points of GDP. And these credits will be used to finance companies, especially SMEs, and individuals in very competitive conditions.

How much will the economy grow in the third quarter?

 

The European economy has stopped, while Spain has been able to grow at 0.4% and 0.6% in the first two quarters. In these moments, the risks for the Spanish economy come more from outside than from inside. With the advanced data we see that the industrial sector has lost some speed, while the service sector is in an expansive and very accelerated phase. We could finish the third quarter in the environment of 0.5%.

Will the citizens find new adjustments, after the budgets of the 2015 election year?
Most of the adjustment of this legislature is already done. We will end 2014 with an increase in tax collection of around 5% and with a better Social Security behavior than budgeted. Only in the Central Administration have we saved 5,000 million in interest. There will be no surprises and the tax reform will be important for taxpayers.

And going back to credit, how do you see your evolution?

The Spanish economy has to deleverage. However, Spanish banks have begun to discriminate risks. At this time, new credit flows to SMEs of less than one million euros and families, both in consumption and mortgage, begin to grow. And this is a consequence of the fact that the perception of bank solvency has improved since the reorganization took place in 2012. In addition, the spreads of the credit cost that we had with the countries of central Europe have been reduced.

Do not you think that the banking sector in Spain is moving towards an oligopoly situation?
In Spain it will happen the same as in France, Holland, United Kingdom … We will have a fortnight of important entities, which will compete.

Will there be a round of mergers between the entities that have remained of medium size?
Nothing is disposable. It is true that there are six entities with a larger size, but I do not believe that others such as Ibercaja, Unicaja, Kutxa, Cajamar and even Bankinter have remained in a no-man’s land because of size … These entities are national and non-regional players and have a role to fulfill. Spanish banks are big. Of the 130 that the ECB will supervise, 15 are Spanish. We believe that you are prepared to pass the supervisor’s exams with good grades.

Will Bankia be able to walk in the future without a controlling shareholder?

Yes, with institutional investors, such as Santander or BBVA now. It has a market share of 10%. He is an important player and he is very healthy. Starting in mid-October, we will sound a second disinvestment. The percentage has not yet been decided, but its quotation already exceeds the price of the last placement.

Does the banking reform end?

The complete divestments of BMN and Bankia are pending, which constitute an important chapter to recover the aid. The Credit Cooperatives Law is also lacking, which will improve corporate governance and define capital instruments.

And foreign banks have disappeared completely from Spain, after the last movements …
Once the ECB takes over the supervision in November, and with the Banking Union underway, I think we will see major cross-border operations in Europe.

After the scandal of Gowex and other companies listed on the MAB, how is it going to improve its operation?

 

We are going to include more supervision in this market. Bolsas y Mercados, the current manager, will be above the operation and the CNMV will be able to demand concrete actions.