In any case, the solvency of the European banking sector has improved significantly since the financial crisis. Recent concerns over the health of the European banking sector stem from the controversy over Deutsche Bank's exposure to structured products and the general state of the Italian banking sector with the creation of a "bad bank".
Recent efforts and the outlook for bank restructuring in Europe
German financial institutions have not been the most willing participants in the larger transparency exercises (or the various stress tests conducted in Europe). The advantage and disadvantage of this management model is that it puts everything in the hands of the industry, without intervention or clear separation of assets.
Mergers: Economies of scale are back
In Spain there is one banking institution for every 205,593 inhabitants, compared to a Eurozone average of one per 60,046 inhabitants. However, the large number of branches explains why customer service is close and personal, with 1,452 residents per branch, compared to a Eurozone average of 2,111.
Economies of scope will be next
Carbó and Rodríguez (2014) propose a methodology that explains how to calculate economies of scale in a complex banking business environment such as the present one. In particular, Table 2 shows how much costs can be reduced for different asset categories in the Spanish banking system.
The overall conclusion from these assessments is that Spain's banks can benefit from integration processes by achieving cost savings on a larger scale. Incorporating fintech alternatives into the banking mix is clearly an option for achieving these types of economies of scope.
Angel Berges and Francisco J. Valero 1
New regulatory changes affecting resolution regimes and imposing limits on payment of dividends/coupons on financial instruments are increasing pressure
Financial sector regulation: Raison d’etre and responses to the crisis
The crisis has prompted a series of regulatory initiatives designed to increase consumer protection in response to cases coming to light in several countries, including Spain. These initiatives are mainly articulated around two lines of action: the protection of the mortgage holder in response to the cases that come and the misuse in the distribution of certain financial instruments.
Regulatory processes: Complexity and uncertainty
A peculiarity of the delegated acts is that they generally see the light of day months after they have been approved by the European Commission. Most of the new rules implemented in Europe are being coordinated at a global level.
Regulatory uncertainty in the current banking business environment
This paradox is partly explained by the Spanish banking system's large provisioning effort since the beginning of the crisis, which has left it less exposed to regulatory developments. Italy and Germany, respectively, are examples of the collateral effects of radical regulatory changes, as well as uncertainty about their implementation, related to the bail-in regime and MDAs.
Nieves Carrera 1 , Jie Mein Goh 2 and Ronny Hofmann 3
In recent years, financial reporting across European banks has, on average, become more complex, reflecting the more challenging operating environment
Introduction and background
In this study, we analyze the narrative of annual reports to investigate how financial reporting information embedded in banks' annual reports is disseminated to investors. The potential benefits arising from the publication of annual reports in English depend on the extent to which the documents contribute to the effective communication of relevant information that can be interpreted by shareholders, individual investors, analysts, the general public and other users of financial information . (Loughran and McDonald, 2014).
Sample and methodology
The FOG index measures the complexity of a text as a function of the average number of words per sentence and the percentage of complex words. As in the case of the language metric, we calculate the tone metric for the entire document.
Complexity and tone of banks’
To obtain measures of the tone of financial stories, we use Loughran and McDonald's (2011) six sentiment vocabularies (uncertain, positive, negative, litigious, strongly modal, and weakly modal) that were created specifically for measuring the tone of financial documents.4 The lists include 285 words indicating uncertainty (e.g. risk, believe and assume), 354 positive words (e.g. favorable and successful), 2,349 negative words (e.g. loss, against, failure and decline) and 871 litigious words (e.g. contract and lawsuits). OPTIMISM defined as the difference between the percentage of positive words and the percentage of negative words.
WORDCOUNT), and the change in the FOG index (∆FOG Index) and in the length of the document (∆LENGTH. Figure 1 shows the mean and median of the FOG index for the sample companies for the period 2005-2012.
Differences within Europe
A t-test for the means of the tone measures for the crisis and non-crisis periods indicates that there are significant differences (see Table 6). Except for the modal strong words, we find significant differences for the tone measures of reports published in the period 2005-2007 compared to those published in 2008-2012.
Cross-country comparisons
Does the severity of the crisis at country level make a difference in the complexity and tone of the narratives of banks' annual reports? The results for the complexity measures (untabulated) indicate that there are no significant differences in the readability of annual reports produced by banks in the excluded countries, except for the variable LogFILESIZEPDF.
Spanish banks’ annual reports compared to their European peers
That is, banks located in Ireland and the UK communicate more non-neutral sentiments in the annual reports than banks located in other countries. Contrary to our expectations, the annual reports produced by banks in Greece, Ireland, Portugal and Spain contain more optimistic words and less pessimistic words.
Conclusion
StiCe-lawrenCe (2015), "Textual Analysis and International Financial Reporting: Large Sample Evidence," University of North Carolina WP 2015. http://papers.ssrn.com/sol3/papers.cfm?abstract_. Repairing the Tower of Babel: How Foreign Firms Communicate with U.S. Investors,” The Accounting Review.
Alain Cuenca 1
Net borrowing requirement
The National Accounts for 2015 do not split these two items, so to distinguish the pension system from unemployment protection it is necessary to look at the details of budget implementation.5 Table 5 shows the expenditure and income recognized by the social security system, which shows that there is a shortage on the income side. Total expenditure by the Public Employment Service (SEPE in its Spanish initials) fell by 12 billion euros.
Government debt
Local government appears to be in better shape, with a surplus overall, with a positive savings rate and primary surplus over the four-year period considered. This situation is not sustainable in the medium term, as it could lead to continued debt growth, the variable examined in the next section.
Noncompliance with fiscal rules
In October 2015, the Commission gave an opinion on the draft budget plan for 2016 and warned that there is a risk of missing the forecasts in the Stability and Growth Pact, due to the budgetary impact of increased spending and income tax reform . This policy was the result of the electoral cycle affecting three levels of government (except in the Basque Country and Galicia, which hold elections in 2016), but this did not prevent the increase in the structural deficit from 1.9% in 2014 to 2.9% in 2015.
Outlook for 2016 and 2017
In the case of the autonomous regions, since 2012 the regional deficit seems to have stabilized between 1.6% and 1.9% of GDP. And finally, it will be necessary to bring the regions back to market discipline.
Ramon Xifré 1
Business creation in Spain is recovering for the first time since the latest crisis
However, some recent trends in business demography and innovation dynamics are raising questions regarding existing and potential future challenges for
Introduction
Third, this article elaborates on innovation activities (both technological and non-technological), which are a key factor in increasing the competitiveness of companies. Finally, the article concludes with an assessment of the results and discusses some proposals recently made by various authors to strengthen the Spanish business environment.
Structural features of Spanish companies
The importance of company size for the competitiveness of the economy is a proven fact, as highlighted by the studies mentioned above. While it is generally accepted that the larger size of a company increases the competitiveness of an economy, there are other underlying factors that play an important role.
Recent developments in Spain’s business demography
Empirical data suggest that business recovery can be partly sustained by a process of substitution where self-employed people replace companies. In the case of the self-employed, the large increase in 2015 did not fully compensate for the losses experienced between 2008 and 2014.
Demography of business innovation
Companies carrying out technological innovation activities in Spain, by company size and main activity sector. There has been a significant decrease in the number of Spanish companies' innovation activities, with small companies more affected than larger ones.
Conclusion and remaining challenges
These two recent phenomena are in addition to the structural conditions by which the Spanish business landscape differs from that of neighboring countries: a higher proportion of small firms and, on average - with exceptions - the lower productivity of these smaller firms. Just as Spain had to undertake a far-reaching labor market reform to increase its competitiveness, these considerations seem to indicate that a “business reform” is also needed to address some of the issues mentioned here.
Rafael Myro 1
However, the reality is that from 2009 to 2013 Spain's economy has been supported by exports, which even without a devaluation became the engine of the economic recovery in the wake of the crisis. These strong export results are the result of a long and fortunate path taken by Spanish companies to orientate themselves towards markets in the rest of the world in response to economic globalization.2.
Exports during the crisis
But the main stimuli came from the growth in the markets of developing countries in the period up to 2013, when the first signs of slowing appeared, and with the decline in the value of the euro until 2012. This factor combined with the growth of world trade to Spanish exports slowed in the summer of 2014.
A long growth trajectory
Spain's membership of the European Community in 1986 ultimately meant the dismantling of its protectionist barriers against other member states. This increase was given a significant boost by three devaluations of the peseta in the early years, which corrected the overvalued rate at which it joined the European Monetary System (the forerunner of the European Monetary Union) in 1989.
The big transformation in the 1990s
No less significant was the change that took place in the export intensity of the different types of companies. That is, after the transformation that took place in the 1990s, the internationalization of Spanish companies in terms of exports reached new heights, but remained essentially dependent on the EU. markets.
Exports, economic recovery and the new growth model
The expansion period prior to the latest crisis was thus marked by a sharp deterioration in the trade balance for goods and services (Appendix 4). Current growth in domestic demand, at over 3%, tends to increase imports by almost 6% under normal conditions (although the average increase in 2014 and 2015 was 7%).8 This is a level exports could reach under normal circumstances, but is difficult at present unless global economic growth picks up.
Concluding remarks
The recovery from the crisis and the future growth of the Spanish economy means that exports must play a bigger role. SMolKa (2015), "The Great Trade Decline and the Spanish Export Miracle: Firm-Level Evidence from the Crisis", Economics Working Papers, 2015-10, Aarhus University. 2014), "La implicación española en cadenas globales de producción", in alonSo, J.
Fidel Castro-Rodríguez 1 and Daniel Miles-Touya 2
Spain´s 2013 reform of the renewable energy support mechanism was essential to reducing the tariff deficit, which arose as a consequence of shortfalls in the
Renewable energy has become one of the most important tools that countries use to reduce their greenhouse gas (GHG) emissions, which climate scientists consider one of the main drivers of global warming. This results in significant uncertainty among investors, which can reduce the effectiveness of the mechanism and jeopardize the achievement of the stated renewable energy targets.
Renewable energy objectives for Spain
This plan is based on the Renewable Energy National Action Plan++n (PANER), which the government drew up in 2010 to meet the requirements of Directive 2009/28/EC. In the specific case of the electricity sector, Table 3 shows the targets for renewable energy production, and Table 4 the targets for installed capacity and energy generation for the different renewable energy technologies over the period 2010-2020.
Instruments to support renewable energy in Spain
These parameters make it possible to calculate the income from the sale of energy, valued at market price, operating costs and the value of the initial investment. New renewable facilities will gain access to the specific compensation system through a competitive process in which the initial value of the investment will be determined.
Political effects of promoting renewable energy over the period
The average premium obtained from RES in Spain in 2012 was one of the highest in the EU, behind Germany and Italy, with a value of 20.7 EUR/MWh compared to the EU average of 13.7 EUR/MWh. This increase in costs and the disparity in electricity tariffs have led to a budget deficit that threatens the stability of the Spanish electricity system.
The 2013 reform: Better financial sustainability but heightened
However, the biggest weakness of the new mechanism is that various aspects of its design cause uncertainty among potential investors. However, these measures were insufficient to correct the growing tariff deficit, which, among other factors, led to the reform of the renewable energy support mechanism.
Nick Greenwood 1
Brexit is likely to have a negative impact on the UK economy. While some offsetting opportunities exist, the shockwaves from losing its second largest
Factors influencing the outcome
Immigration arguments over whether the UK would have more or less ability to control internal migration from within or outside the EU. And influence arguments over whether the UK's voice will be stronger inside or outside the EU.
Economic implications for the UK
No access to EU free trade agreements Agriculture and fisheries not substantively covered Accepts most EU rules, including free movement of people. These conclusions are supported by the trade-off the UK would face between increasing freedom of action and maintaining access to EU markets.
Implications for the EU
Trade channel: The EU has a trade surplus with the UK of around 0.8% of EU GDP. According to Elcano (2015), the UK is the country that contributes the most to the EU's global projection.
UK-Spain links
The UK is also a particularly important market for Spanish exports of transport goods (cars, trains, planes) as well as foodstuffs (fruit and vegetables). Meanwhile, the UK is the fifth largest investor in Spain, with major investments in telecommunications and tobacco.
Summary and conclusions
Meanwhile, the United Kingdom is the primary destination for Spanish migrants, although they are mainly younger and focused on seeking employment opportunities. The UK is the number one destination for Spanish outward foreign direct investment accounting for 14% of total Spanish outward FDI.
Prepared by the Regulation and Research Department of the Spanish Confederation of Savings Banks (CECA)
Bank of Spain Circular on information about cash withdrawal fees from ATMs
Prepared by the Regulation and Research Department of the Spanish Confederation of Savings Banks (CECA).
Draft CNMV Circular on warnings concerning financial instruments
Funcas Economic Trends and Statistics Department
The forecast for 2016 remains unchanged at 2.7%
The forecast for 2017 remains unchanged at 2.3%
The indicators for the manufacturing industry are contradictory
Inflation is again surprisingly low
Employment continues to grow, although more slowly
The current account surplus will grow in 2016
The government deficit will overshoot the target by a few tenths of a percent
Slight improvement in the perception of the global economy
Long-term interest rates are very low
The euro has risen again
Fiscal policy should be neutral
1 Difference in percentage points between the current month's average and that of two months earlier (or six months earlier).
KEY FACTS
Annual percentage change Graph 2.4.- VAT, structure according to sectors Percentage added value at basic prices. Annual percentage change Graph 4.4.- Functional distribution of income Percentage of GDP, 4-quarter moving averages Graph 4.2.- National income, consumption.
KEY FACTS: 50 FINANCIAL SYSTEM INDICATORS – FUNCAS
Highlights
Percentage change in credit to the private sector for the sum of banks, thrifts and credit unions 29. Percentage change in debt securities on the asset side for the sum of banks, thrifts and credit unions 31.
European banks in the face of new regulatory pressures
