Post-programme surveillance report : Spain, Autumn 2019.
Date: 2020-01-23
Institutions: Directorate-General for Economic and Financial Affairs
Subjects: Spain, aid for restructuring, economic development, economic growth, economic indicator, economic policy, economic reform, financial aid, financial institution, financial policy, report, structural adjustment

ISSN 2443-8014 (online)

Post-Programme 
Surveillance 
Report

Spain, Autumn 2019

INSTITUTIONAL PAPER 117 | NOVEMBER 2019

EUROPEAN ECONOMY

Economic and 
Financial Affairs

European  Economy  Institutional  Papers  are  important  reports  analysing  the  economic  situation  and 
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European Commission 
Directorate-General for Economic and Financial Affairs 

Post-Programme Surveillance Report   
Spain, Autumn 2019 

EUROPEAN ECONOMY                                                                                    Institutional Paper 117 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACKNOWLEDGEMENTS 

The report was prepared under the direction of Declan Costello, Deputy Director General, and Manfred 
Bergmann,  Director,  Directorate  General  for  Economic  and  Financial  Affairs.  The  preparation  of  the 
report  was  overseen  by  Laura  Bardone,  Head  of  Unit  -  Croatia  and  Spain,  Directorate  General  for 
Economic  and  Financial  Affairs  and  Peter  Grasmann,  Head  of  Unit  -  EU/Euro  area  financial  system, 
Directorate General for Financial Stability, Financial Services, and Capital Markets (1). 

Contributors:  

Laura  Bardone,  Gerrit  Bethuyne,  Peder  Christensen,  Oskar  Grevesmuhl,  and  Teresa  Sastre  de  Miguel, 
Directorate  General  for  Economic  and  Financial  Affairs.  Peter  Grasmann  and  Laszlo  Butt,  Directorate 
General  for  Financial  Stability,  Financial  Services  and  Capital  Markets  Union.  Lucas  Gonzalez  Ojeda, 
Directorate General for Communication (Representation Madrid). Co-ordination and editing were ensured 
by Laura Bardone and Teresa Sastre de Miguel. Technical assistance was provided by Michel Gerday. 

The  report  was  prepared  in  liaison  with  the  European  Central  Bank  and  the  European  Stability 
Mechanism. 

Comments on the report would be gratefully received and should be sent, by mail or e-mail to: 

Laura BARDONE 
European Commission 
Unit ECFIN.DDG1.F.3 
B-1049 Brussels 

Laura.Bardone@ec.europa.eu 

or 

Peter GRASMANN 
European Commission 
Unit FISMA.E.1 
B-1049 Brussels 

Peter.Grasmann@ec.europa.eu 

The cut-off date for the data included in this report is 7 November 2019 

(1)  The  executive  summary  of  this  report  was  adopted  as  Commission  Communication  C(2019) 8470  on  20  November  2019. 

The rest of the report is the Staff Working Document SWD(2019) 415 accompanying this Communication. 

2 

 
 
 
 
 
                                                           
CONTENTS 

Executive Summary 

1. 

Introduction 

2.  Macroeconomic developments 

3. 

4. 

Financial sector trends 

Financial sector reforms and policy 

SAREB – recent developments and outlook 

4.1. 
4.2.  Progress with financial sector reforms and challenges ahead 

A.  Main macroeconomic and financial indicators 

LIST OF TABLES 

A.1.  Main macroeconomic and financial indicators 

LIST OF GRAPHS 

IBEX35, STOXX 600 Banks and selected Spanish banks stocks 

Indebtedness by sector 

Sovereign spreads to the 10-year German bund 

2.1.  Composition of GDP growth 
2.2. 
3.1. 
3.2. 
3.3.  Bank deposits 
3.4.  Bank loans to the private sector 
3.5.  Cost of borrowing for NFCs 
3.6.  Ratio of non-performing loans 
3.7.  Bank sector profitability for domestic operations 

5 

7 

8 

11 

15 

15 
15 

17 

17 

8 
10 
11 
11 
12 
12 
13 
14 
14 

3 

 
 
 
 
 
 
ABBREVIATIONS 

BdE 

BRRD 

CCyB 

CDS 

CET 1 

CSRs 

EC 

ECB 

ESM 

FROB 

GDP 

HICP 

INE 

MIP 

MREL 

NFCs 

NPLs 

PPS 

ROA 

ROE 

SAREB 

SMEs 

Banco de España, Bank of Spain 

Bank Recovery and Resolution Directive 

Counter-Cyclical capital Buffer 

Credit Default Swaps 

Common Equity Tier 1 

Country-Specific Recommendations 

European Commission 

European Central Bank 

European Stability Mechanism 

Fondo de Reestructuración Ordenada Bancaria, Fund for Orderly Bank Restructuring 

Gross Domestic Product 

Harmonised Index of Consumer Prices 

Instituto Nacional de Estadística, the Spanish National Statistics Institute 

Macroeconomic Imbalance Procedure 

Minimum Requirement for own funds and Eligible Liabilities 

Non-Financial Corporations 

Non-Performing Loans 

Post Programme Surveillance 

Return on Assets 

Return on Equity 

Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria S.A. 

Small and Medium-sized Enterprise 

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXECUTIVE SUMMARY 

This twelfth surveillance report provides an assessment of Spain's economic and financial situation 
following  its  exit  from  the  financial  assistance  programme  in  January  2014.  A  team  from  the 
European Commission (EC), in liaison with staff from the European Central Bank (ECB), carried out the 
twelfth  post-programme  surveillance  visit  to  Spain  on  8-9  October  2019 (2).  The  European  Stability 
Mechanism  (ESM)  participated  in  the  meetings  in  the  context  of  its  own  Early  Warning  System.  The 
report  focuses  on  macroeconomic  and  financial  sector  developments  over 
the  past  months, 
complementing the surveillance by the Commission under the macroeconomic imbalances procedure, the 
Stability and Growth Pact and, more broadly, the European Semester of economic policy coordination.  

The  Spanish  banking  sector  has  relatively  good  profitability,  strong  liquidity  and  adequate 
capitalisation, but faces risks. As in other EU countries, banking sector profitability and hence capital 
generation  will  remain  under  pressure  in  the  prolonged  low-interest-rate  environment  and  as  Spain’s 
economic activity is slowing down. Spanish banks managed to decrease further their non-performing loan 
(NPL) ratios to just above the EU average. However, real estate market activity has moderated in 2019 
and  this  could  slow  down  sales  of  non-performing  real  estate  assets  by  banks.  The  banking  sector’s 
overall capital position has slightly improved but remained low in comparison to the rest of the EU. The 
asset management company, SAREB, continues to implement its new strategy of accelerating the pace at 
which it takes possession of the real state property collateral behind its non-performing loans to real estate 
companies.  This  is  aimed  at  improving  the  overall  recovery  rates  on  its  non-performing  assets  through 
real property sales. Implementing this strategy might entail high operational costs and could pose risks to 
the materialisation of the planned recoveries within SAREB’s lifespan, i.e. by end 2027.  Consequently, 
the  implementation  of  this  strategy  requires  close  and  regular  monitoring,  with,  if  needed,  appropriate 
adjustments.  

Economic growth is set on a  moderating though still expansionary path. Revised  national accounts 
show that GDP growth in recent quarters has been lower than previously estimated. Economic activity is 
expected  to  moderate  further  going  forward  to  2021,  but  remain  above  the  EU  average.  Job  creation, 
which  started  to  lose  traction  in  mid-2019,  is  also  expected  to  continue  weakening.  Still,  the 
unemployment  rate  is  set  to  continue  falling,  to  13%  in  2021.  On  14  June  2019,  Spain  exited  the 
excessive deficit procedure and became subject to the preventive arm of the Stability and Growth Pact as 
of  2019  (3).  The  Country-specific  Recommendations  (CSRs)  adopted  by  the  Council  of  the  European 
Union on 9 July 2019 (4), call on Spain to pursue fiscal adjustment by delivering an adequate fiscal effort 
towards the medium term objective of a balanced budget in structural terms. The CSRs also recommend 
Spain  to  address  weaknesses  in  the  labour,  product  and  services  markets,  improve  social  policy  and 
educational  outcomes  and  preserve  the  sustainability  of  pension  system,  while  fostering  innovation  and 
resource and energy efficiency. 

On  the  basis  of  the  analysis  in  the  report,  repayment  risks  for  the  ESM  loan  appear  very  low. 
Overall,  a  stabilised  financial  sector  and  still  relatively  robust  economic  growth  keep  repayment  risks 
low. The average cost of outstanding government debt in September 2019 was about 2 pps. lower than in 
2011. This,  combined  with  a  lengthening  average  life  of  debt  outstanding,  further  decreases  repayment 
risks for the ESM. Spain has made nine voluntary early repayments, and the outstanding amount of the 
ESM  loan  currently  stands  at  EUR 23.7 billion,  or  57%  of  the  total  amount  drawn  by  Spain  under  the 
programme. 

The next post-programme surveillance mission will take place in spring 2020. 

(2)  European Central Bank (ECB) Staff participated in this mission, and in the drafting of this report, in accordance with the ECB's 
competences and thus provided expertise on financial sector policies and macro-critical issues, such as headline fiscal targets 
and sustainability and financing needs. 

(3)  https://www.consilium.europa.eu/media/39759/st10336-en19.pdf  
(4)  https://ec.europa.eu/info/sites/info/files/2018-european-semester-country-specific-recommendation-commission-

recommendation-spain-en.pdf 

5 

                                                           
1. 

INTRODUCTION 

the 

Spain 

Eventually, 

1.  Spain  successfully  exited 
financial 
assistance  programme  for  the  recapitalisation 
of  financial  institutions  in  January  2014.  The 
Programme was agreed by the Eurogroup on 9 July 
2012  for  a  period  of  18  months  (5)  and  provided 
financing by the euro area Member States of up to 
EUR 100 billion. 
used 
EUR 38.8 billion  for  bank  recapitalisation,  under 
restructuring and resolution plans approved by the 
European  Commission  consistently  with  State-aid 
rules,  and  around  EUR 2.2 billion  for  capitalising 
SAREB, the Spanish asset  management company. 
Both  the  bank-specific  conditionality  and  the 
horizontal 
the 
Memorandum  of  Understanding  were  fulfilled  as 
scheduled (6).  From  July  2014  to  October  2019, 
Spain  made  nine  voluntary  early  repayments.  The 
outstanding  amount  of  the  ESM  loan  stands  at 
EUR 23.7 billion,  which  represents  57%  of  the 
the 
total  amount  disbursed 
programme. 

to  Spain  under 

conditionality 

included 

in 

2.  Staff  from  the  European  Commission,  in 
the  European  Central  Bank, 
liaison  with 
undertook  the  twelfth  post-programme  review 
mission to Spain on 8-9 October 2019. The ESM 
participated  in  the  meetings  on  aspects  related  to 
its  own  Early  Warning  System.  Post-programme 
surveillance  (PPS)  aims  at  a  broad  monitoring  of 
the  repayment  capacity  of  a  country  having 
received financial assistance (7). There is no policy 
conditionality under PPS, although the Council can 
issue  recommendations  for  corrective  actions  if 
deemed necessary and appropriate. PPS is biannual 
in  terms  of  reporting  and  missions.  The  previous 
PPS mission took place in May 2019 (8). 

(5)  However, the completion of the restructuring of the banks 
receiving public support under the State aid rules was due 
to take place after the exit from the programme.  

(6)  For more details see the report: 

https://ec.europa.eu/info/publications/economy-
finance/evaluation-financial-sector-assistance-programme-
spain-2012-2014_en . 

(7)  PPS is foreseen by Art. 14 of the two-pack 

Regulation (EU) N°472/2013.  It  starts  automatically  after 
the expiry of the programme and lasts at least until 75% of 
the financial assistance has been repaid. 
(8)  For more details see the previous PPS report:  

https://ec.europa.eu/info/sites/info/files/economy-
finance/ip106_en_1.pdf 

under 

3.  The  autumn  2019  PPS  focuses  on  the 
Spanish  financial  sector,  complementing  the 
surveillance 
the  macroeconomic 
the  Stability  and 
imbalances  procedure, 
Growth  Pact  and  more  broadly  the  European 
Semester  of  economic  policy  coordination. This 
PPS report complements the 2019 Country Report 
for Spain (9), published on 27 February 2019 in the 
context  of  the  European  Semester.  That  report 
included  an  In-Depth  Review  on  the  prevention 
and  correction  of  macroeconomic 
imbalances 
(EU)  No 
under  Article  5  of  Regulation 
1176/2011.   The  Commission’s  analysis  in  the 
report led it to conclude that Spain is experiencing 
macroeconomic  imbalances  which  have  cross-
border  relevance  (10).  On  14  June  2019,  Spain 
exited  the  excessive  deficit  procedure  and  thus 
became  subject  to  the  preventive  arm  of  the 
Stability  and  Growth  Pact  as  of  2019.  The 
(CSRs) 
Country-specific 
adopted by the Council of the European Union on 
9  July  2019,  call  on  Spain (11)  to  pursue  fiscal 
adjustment  in  line  with  the  requirements  of  the 
in  particular  by 
Stability  and  Growth  Pact, 
delivering  an  adequate  fiscal  effort  towards  the 
medium  term  objective  of  a  balanced  budget  in 
structural terms. The CSRs also recommend Spain 
to  address  weaknesses  in  the  labour,  product  and 
improve  social  policy  and 
services  markets, 
educational 
the 
sustainability  of  pension  system,  while  fostering 
innovation and resource and energy efficiency. 

Recommendations 

outcomes 

preserve 

and 

(9)  https://ec.europa.eu/info/sites/info/files/2019-european-

semester-country-report-spain-en.pdf  

(10)  https://ec.europa.eu/info/sites/info/files/2019-european-
semester-country-report-communication_en.pdf  
(11)  https://ec.europa.eu/info/sites/info/files/2018-european-

semester-country-specific-recommendation-commission-
recommendation-spain-en.pdf  

7 

                                                           
 
 
 
                                                           
2.  MACROECONOMIC DEVELOPMENTS 

4. 
In 2018, Spain continued growing above the 
euro  area  average.  Despite  continued  slowdown 
since  the  2015  peak,  real  GDP  grew  by  a  robust 
2.4%  in  2018.  Private  consumption  slowed  down 
sharply,  allowing  for  an  increase  in  the  savings 
rate, whereas investment, especially in equipment, 
surprised  by  its  strength.  By  contrast,  net  exports 
negatively contributed to economic growth.  

5.  Economic  growth  is  set  on  a  moderating 
though still expansionary path. In the first half of 
2019,  real  GDP  grew  by  about  2.1  %  y-o-y,  less 
than  expected  in  the  European  Commission  2019 
summer  forecast,  mainly  as  a  result  of  lower 
domestic  demand.  Data  for  the  third  quarter (12) 
point  to  a  more  moderate  slowdown  than  in  the 
first half of 2019. Growth is  however expected to 
continue  easing  until  2021,  amid  high  uncertainty 
arising  from  both  external  and  domestic  factors. 
Investment in equipment decelerated sharply in the 
first  half  of  this  year,  reflecting  weakness  in  the 
manufacturing  sector,  and  is  set  to  grow  only 
moderately  over 
the  forecast  horizon,  while 
activity  in  the  construction  sector  is  expected  to 
decelerate.  Following  very  weak  growth  in  recent 
quarters, consumption is set to slightly rebound, as 
employment continues to expand and  wages grow 
above inflation, also pushed by the increase in the 
minimum  wage  in  2019.  Still,  consumption  is 
expected  to  grow  less  than  disposable  income, 
resulting  in  a  continued  gradual  recovery  in  the 
household savings rate. 

6.  The  contribution  of  the  external  sector  to 
growth  is  expected  to  be  positive  over  the 
projection  horizon.  Exports  are  forecast 
to 
continue  growing  only  moderately,  amid  trade 
tensions  and  weak  global  growth.  Import  growth 
has  been  unusually  low  in  recent  quarters,  partly 
reflecting  weak  demand 
and 
investment  goods.  This  should  result  in  a  large 
positive  contribution  of  net  exports  to  growth  in 
2019.  As  the  import  intensity  of  final  demand  is 
expected  to  gradually  recover,  the  contribution  of 
net  exports  to  growth  is  expected  to  diminish  but 
remain positive in 2020 and 2021. After worsening 
in 2018, the terms of trade are set to stabilise over 
the forecast horizon. These factors should result in 
the current account surplus gradually increasing to 

for  durable 

(12)  Flash  GDP  estimate  released  after  the  cut-off  date  of  the 

Commission forecast (24 October). 

8 

2.6%  of  GDP  by  2021.  By  the  second  quarter  of 
2019, the net international investment position had 
improved  by  16  pps  of  GDP  from  2014  and  net 
external debt had declined up to 79.6%.  

to 

are 

related 

7.  Risks  to  the  outlook  are  mainly  on  the 
downside.  Risks 
external 
developments  such  as  further  trade  restrictive 
measures,  a  more  protracted  slowdown  in  world 
GDP growth than anticipated, geopolitical tensions 
which  could  push  oil  prices  up  and  more  adverse 
Brexit developments than assumed. On the upside, 
trade 
than 
tensions  could  be  resolved  faster 
assumed,  giving  rise  to  a  stronger  rebound  of 
foreign trade.   

Graph 2.1:  Composition of GDP growth 

pps.

5

4

3

2

1

0

-1

-2

-3

-4

-5

-6

forecast

10 11 12 13 14 15 16 17 18 19 20 21
Public consumption
Net exports
Real GDP (y-o-y%)

Private consumption
GFCF
Inventories

GFCF: gross fixed capital formation 
Source: INE, European Commission Economic Forecast, 
autumn 2019. 

8.  Core  inflation  is  expected  to  gradually 
increase. The European Commission 2019 autumn 
forecast  projects  HICP  inflation  to  decline  from 
1.7% in 2018 to 0.9% in 2019, due to base effects 
from  energy  prices,  and  to  rebound  thereafter, 
reaching 1.4% in 2021, as core inflation gradually 
increases. 

9.  Unemployment  is  set  to  continue  falling, 
despite a lower pace of job creation. The pace of 
employment  growth 
to  continue 
moderating  over  the  forecast  horizon,  reflecting 
slower growth of final demand. National accounts 

is  expected 

                                                           
      
2. Macroeconomic developments 

data for the third quarter (13) also point to a faster-
than-anticipated  slowdown  in  job  creation.  Still, 
the unemployment rate is set to continue falling, to 
13%  in  2021,  the  lowest  rate  since  2008.  Wage 
growth is expected to peak in 2019, and moderate 
afterwards but still grow at a rate above inflation in 
2020.  Combined  with  moderate  growth  of  labour 
productivity  over  the  forecast  horizon,  this  will 
lead to an acceleration in nominal unit labour cost 
growth  in  2019  and  a  further,  smaller  increase  in 
2020 and 2021.  

low,  only  slightly  above 

10.  The  housing  market  keeps  recovering 
though activity has moderated in 2019. By 2018, 
the  number  of  transactions  on  dwellings  had 
increased by about 60% since they bottomed out in 
2013.  The  increase  mainly  concerned  secondary 
dwellings,  while  transactions  on  new  dwellings 
remained  very 
the 
minimum recorded during the crisis. In both cases 
the  number  of  transactions  has  slowed  down  in 
2019, likely affected to some extent by changes in 
new  mortgage  market  legislation  enacted  in  the 
first  months  of  the  year.  The  supply  of  new 
housing  has  been  increasing  over  the  last  three 
years  (by  about  9%  y-o-y  on  average  between 
2015  and  2018),  but  the  growth  pace  started  to 
slowdown  in  mid-2018  and  it  grew  by  4%  in  the 
second  quarter  of  2019.  However,  the  steady 
growth of new building permits at a high rate over 
the  latest  quarters  suggests  housing  supply  still 
growing  in  the  near  future.  Unsubsidised  house 
prices  increased  by  5.3%  year-on-year  in  the 
second  quarter  of  2019 (14).  Prices  of  new 
dwellings  went  up  by  7.2%  and  those  of  used 
dwellings  by  5.0%,  signalling  a  deceleration  in 
both  cases  relative  to  their  previous  accelerating 
path.  House  price  developments  vary  greatly 
across  regions,  with  larger  increases  in  the  major 
cities  and  the  coastal  areas.  In  big  cities,  the 
increased  propensity  to  rent  after  the  crisis  and 
improved  economic  conditions  have  put  pressure 
on  rental  prices.  Though  information  on  this 
market is rather scarce, real estate portals point to a 
fast  increase  in  rental  prices  over  recent  years, 
which might have started to moderate in 2019.   

11.  The general government deficit reduction is 
expected to slow further. After decreasing by 0.5 
pps.  to  2.5%  of  GDP  in  2018,  the  general 

(13)  See footnote 12. 
(14)  Source: INE. 

transfers, 

is  expected 

government  deficit 
to  continue 
declining over the forecast horizon, but at a slower 
pace. Despite the moderation in economic growth, 
revenues are expected to grow at a relatively rapid 
pace 
social 
in  2019,  helped  by  buoyant 
contributions, and personal income taxes. This rise 
in  revenues  should  more  than  offset  significant 
increases in expenditure related to compensation of 
employees  and  social 
in  particular 
pensions, leading the general government deficit to 
narrow  to  2.3%  of  GDP  for  the  full  year.  In  the 
absence  of  a  2020  budget  bill,  the  deficit  is 
projected  to  decline  further  to  2.1%  of  GDP  in 
2020. This forecast includes the wage increase for 
public  employees  stipulated 
the  2018-20 
agreement  with  the  unions  and  an  annual  pension 
revaluation in line with inflation. At the same time, 
it  incorporates  only  some  of  the  potential  savings 
identified  in  the  spending  reviews  published  by 
AIReF  which,  if  fully  implemented,  could  help 
lowering the deficit from 2020 onwards. Assuming 
no  change  in  policy,  the  deficit  is  expected  to 
narrow to 2.0% of GDP in 2021.  

in 

12.  The  public  debt  ratio  is  set  to  continue 
decreasing  slowly  but  to  remain  high  over  the 
forecast  horizon.  According  to  the  Commission 
2019  autumn  forecast,  gross  general  government 
debt will decrease from 97.6% in 2018 to 96.0% of 
GDP in 2021. The decline is expected to be driven 
by  nominal  GDP  growth  and  falling  interest 
expenditure, while the primary balance is likely to 
remain broadly unchanged around zero. The strong 
increase  in  the  average  life  of  debt  outstanding 
observed  during  the  2015-18  period  has  levelled 
off  somewhat  so  far  in  2019.  As  of  early 
September 2019, it amounted to around 7.6 years, 
compared  to  the  low  point  of  6.2  years  in  2013. 
The  cost  at  issuance  reached  an  all-time  low  in 
early  September  2019  at  0.4%  and  remains 
significantly  below  the  cost  of  debt  outstanding, 
which  stood  at  2.4%  at  that  time.  In  2011,  both 
stood  at  around  4.0%.  The  average  cost  of  debt 
will continue falling as long as the cost of issuance 
remains  below  the  cost  of  debt  falling  due.  Over 
the last four years, Spanish residents have reduced 
their  holdings  of  Spanish  state  debt  instruments 
from just over half of their total amount to around 
three  tenths.  This  has  been  fully  offset  by  a 
corresponding increase in the holdings of the Bank 
of  Spain,  which  now  holds  slightly  over  one  fifth 
of  debt  instruments  of  the  state,  mainly  in  the 
the  ECB 
context  of 

implementation  of 

the 

9 

                                                           
European Commission 

Post-Programme Surveillance Report 

monetary  policy  decisions.  The  share  of  non-
resident investors has been rather stable at slightly 
below  half,  showing  only  a  slight  tendency  to 
increase in the course of 2019. 

13.  The  stock  of  private  debt  has  continued 
declining,  but  deleveraging  needs  persist.  The 
total  stock  of  debt  of  the  non-financial  private 
sector  amounted  to  153.2%  of  GDP  in  non-
consolidated terms at the end of the second quarter 
of  2019  (58.6%  of  GDP  held  by  households  and 
94.5%  of  GDP  by  non-financial  corporations 
(NFCs))  (see  Graph 2.2).  This  is  73  pps.  lower 
than  its  peak  in  the  second  quarter  of  2010. 
Consolidated  private  sector  debt  decreased  by  5.0 
pps to around 130% of GDP in 2019, in line with 
the  MIP  threshold  for  the  first  time  since  2003. 
However,  the  stock  of  private  debt  has  remained 
above  prudential  levels  and  fundamental-based 
benchmarks for both households and NFCs. In the 
first  half  of  2019,  the  stock  of  debt  in  nominal 
terms  fell  only  slightly  compared  to  the  same 
period  in  2018  for  households,  but  increased  for 
NFC.  GDP  growth  was  thus  the  main  driver  of 
private sector deleveraging in the first two quarters 
of 2019. Most of the debt reduction since 2010 has 
been  made  by  non-financial  corporations (15),  but 
progress  in  households'  deleveraging  was  also 
significant  over  the  period.  Over  recent  years,  the 

decline in the volume of mortgages has been offset 
by  significant  growth  in  loans  to  finance  durable 
consumer  spending.  The  growth  in  consumer 
credit  has  supported  private  consumption,  but  its 
increase  may  make  households,  especially  the 
over-indebted  ones,  more  vulnerable  to  adverse 
shocks (16). Since the start of 2019, the growth of 
this type of debt has slowed down. 

Graph 2.2: 

Indebtedness by sector 

400 % of GDP

350

300

250

200

150

100

50

0

Monetary financial institutions
General government
Households and NPISH
Non-financial corporations
Private sector

NPISH: Non-profit institutions serving households 
Source: BdE, own calculations. 

(15)  In  consolidated  terms,  the  NFC  debt  decreased  from 
119.9%  of  GDP  in  Q2-2010,  to  73.4%  in  Q2-2019. 
Financial derivatives are not included in these figures. 

(16)  Financial Stability Report by Bank of Spain, Autumn  2019 
https://www.bde.es/bde/en/secciones/informes/boletines/ 
Informe_de_Estab/ 

10 

                                                           
      
                                                           
 
 
 
 
 
 
3. 

FINANCIAL SECTOR TRENDS 

14.  Spain's  financial  sector  remained  resilient 
in  the  first  three  quarters  of  2019.  Financial 
markets  and  the  financial  sector  in  Spain  have 
remained rather stable, despite uncertainties in the 
domestic and international environment. However, 
the  share  prices  of  Spanish  banks  continued 
decreasing and underperforming the national stock 
index  (IBEX 35)  and  moved  rather  in  synchrony 
with  the  European  sectoral  index  STOXX  Europe 
600 Banks (see Graph 3.1).  

Graph 3.1: 

IBEX35, STOXX 600 Banks and selected Spanish 
banks stocks 

1/1/18=100
120

110

100

90

80

70

60

50

40

30

IBEX35
CaixaBank
Bankia
Sabadell
BBVA
Santander
STOXX Europe 600 banks

01/18

07/18

01/19

07/19

Source: Madrid Stock Exchange via Macrobond, own 
calculations. 

15.  Spanish  government  bond  yields  and 
spreads  have  declined  over  the  first  three 
quarters  of  2019  (see  Graph 3.2).  The  spread 
between  Spain’s  benchmark  10-year  government 
bond and the 10-year German bund declined from 
around 120 bps in January 2019 to around 65 bps 
at  the  end  of  October  2019.  Likewise,  the  5-year 
Spanish  CDS  spread  decreased  from  65  basis 
points at end 2018 to 36 basis points at the end of 
October 2019, with a yield at 0.23%. In September 
2019, S&P upgraded Spain’s sovereign rating from 
A- to A. 

Graph 3.2: 

Sovereign spreads to the 10-year German 
bund 

Spain

Italy

France

Ireland

Portugal

bps.

1400

1200

1000

800

600

400

200

0

10

11

12

13

14

15

16

17

18

19

Source: IHS Markit, Macrobond, own calculations. 

further 

reduced 

16.  Spanish  banks  maintained  good  liquidity 
and 
their  Eurosystem 
borrowing.  Total  domestic  bank  deposits 
excluding  monetary  financial  institutions  (MFIs) 
continued to increase, by 2.2% y-o-y in September 
2019,  although  with  variations  across  sectors: 
whilst  bank  deposits  by  private  non-financial 
sector  maintained  a  strong  growth  pace,  with 
+5.7% for households and +3.1% for non-financial 
corporations  y-o-y  (see  Graph 3.3),  bank  deposits 
of  non-MFIs  (e.g.:  asset  securitisation  funds, 
central counterparties), insurance corporations and 
pension  funds    decreased  by  10%.  Bank  deposits 
of  MFIs  decreased  by  13%.  As  banks  prepare  for 
the  upcoming  MREL  requirements ( 17),  securities 
other than shares issued by credit institutions grew 
fast, by 8.5% y-o-y in August 2019, reaching 8.4% 
of  total  assets.  Finally,  Spanish  banks'  total  net 
borrowing from the Eurosystem declined fast over 
the 
to 
EUR 145.9 billion, in September 2019.  

summer, 

13.2% 

y-o-y, 

by 

(17)  MREL: Minimum Requirement for own funds and Eligible 

Liabilities. 

11 

        
  
                                                           
European Commission 

Post-Programme Surveillance Report 

Graph 3.3: 

Bank deposits 

Graph 3.4: 

Bank loans to the private sector 

% y-o-y

% y-o-y

Total non-MFI private sector

Non-financial corporates

Households & NPISH

10

5

0

-5

-10

-15

-20

-25

Total domestic deposits excluding MFIs

Non-financial corporate deposits

Household deposits

30

20

10

0

-10

-20

10

11

12

13

14

15

16

17

18

19

Source: BdE. 

assets 

domestic 

total  assets 

increased  by  1.5% 

continued 
17.  Banks 
decreasing.  Between  September  2018 
and 
September  2019,  banks’  domestic  assets(18) 
decreased  by  3.5%,  to  EUR 1.88  trillion,  whereas 
banks’ 
to 
EUR 2.69 trillion in the same period. The stock of 
debt  securities  decreased,  while  the  loan  portfolio 
remained 
largely  unchanged.  The  stock  of 
domestic private credit decreased (by -1.16% y-o-
y). This was mainly driven by the decline in credit 
to NFCs (-2.5% y-o-y) (see Graph 3.4), as a result 
of negative new lending to NFCs, led by the strong 
reduction  of  credit  lines  (-15%  y-o-y),  and  other 
new  lending  to  SMEs  (-1.6%  in  the  first  nine 
months  of  2019  y-o-y,  proxied  by  loans  under 
EUR 1 million).  At  the  same  time,  new  loans  to 
large  corporates 
loans  above 
EUR 1 million)  grew  by  2.3%  in  the  first  nine 
months  of  2019  y-o-y.  Finally,  the  stock  of 
domestic  credit  to  households  remained  flat  over 
the  first  nine  months  of  2019.  While  the  stock  of 
mortgage loans continued to decline, by 1.4% y-o-
y,  the  stock  of  consumer  credit  continued  to 
increase  (+8.3%  y-o-y).  Though  the  share  of 
consumer  credit  in  total  credit  remains  low,  this 
credit category has typically a higher potential for 
losses than other types. 

(proxied  by 

(18)  Source: BdE, 

https://www.bde.es/webbde/es/estadis/infoest/a0802e.pdf  

12 

10

11

12

13

14

15

16

17

18

19

The decrease in the stock of loans in late 2012 and early 
2013 was due to the transfer of assets to SAREB. 
Source: BdE, own calculations. 

for  approving 

18.  In  the  third  quarter  of  2019,  credit 
standards 
loans  remained 
unchanged (19). For enterprise and housing loans, 
credit  standards  did  not  change.  For  consumer 
loans,  they  tightened,  reflecting  increased  risk 
perceptions and aversion by banks. Net demand for 
all loan types (enterprises, housing and consumer) 
declined in Spain. Demand for loans by enterprises 
was  mainly  supported  by  the  low  level  of  interest 
rates,  while consumers’  more subdued assessment 
of  economic  and  financial  trends  weighed  on 
demand for consumer loans. 

(19)  According  to  the  Eurosystem  Bank  Lending  Survey  of 

October 2019. See the report at: 
https://www.ecb.europa.eu/stats/ecb_surveys/bank_lending
_survey/html/index.en.html 

        
                                                           
 
     
                                                           
 
Graph 3.5:  Cost of borrowing for NFCs 

Up to and including EUR 1 million (ES)
Over EUR 1 million (ES)
Up to and including EUR 1 million (DE)
Over EUR 1 million (DE)

%

7

6

5

4

3

2

1

0

10

11

12

13

14

15

16

17

18

19

Source: ECB. 

19.  On  aggregate,  Spanish  banks  continued  to 
reduce their non-performing loans during 2018 
and the first half of 2019. Against the background 
of continued positive economic developments over 
the  past  year,  the  total  stock  of  NPLs  as  reported 
by  BdE(20)  in  both  the  corporate  and  household 
segment decreased by EUR 14 billion (-17.3%)  y-
o-y  down  to  EUR 65 billion  by  June  2019.  The 
share  of  NPLs  in  total  loans  (NPL  ratio)  went 
down  by  one  percentage  point  to  5.35%  over  the 
same  period,  in  a  context  of  still  flat  volumes  of 
credit. By sector, the latest data show that in June 
2019  especially  construction  and  real  estate  NPLs 
fell strongly (and were almost halved y-o-y), down 
to  12.6%  and  7.7%,  respectively.  The  household 
NPL  ratio  also  decreased,  but  at  a  lower  pace, 
down to 4.7% in June 2019 compared to 5.17% a 
year earlier (see Graph 3.6). At consolidated level, 
data from the European Central Bank (ECB) show 
that the NPL ratio for Spanish banks decreased y-
o-y from 4.1% to 3.4% in June 2019, and remains 
above  the  EU  average  of  2.9%.  As  regards 
provisioning  levels,  ECB  data  for  Spain  show  a 
decrease in the coverage ratio (43.9% at the end of 
June 2019 vs. 44.7% a year earlier), which remains 
below the EU average of 46.2%. 

20.  Over the first half of 2019, banks continued 
to  reduce  their  forborne  exposures.  Forborne 
loans  continued  to  decrease  over  the  past  year,  to 
stand at 5.4% of total credit to the resident private 

(20)  The  BdE  reports  the  stock  of  doubtful  debtors,  to  which 

this report refer as NPLs. 

3. Financial sector trends 

ratio 

sector  in  June  2019.  This  is  20.2%  lower  than  a 
year  earlier.  This  decline  was  across  the  board  in 
NFCs and households, but was overall smaller than 
a  year  earlier (21).  Nevertheless,  according  to 
European  Banking  Authority  (EBA)  data,  the 
forbearance 
for  Spanish  banks,  after 
experiencing a significant reduction from 10.2% in 
September  2014  to  3.4%  in  June  2019,  remained 
almost double the ratio of the EU average (1.9%). 
This  suggests  that  there  is  still  room  for  further 
reduction. Furthermore, after  falling by  more than 
EUR 20 billion  in  2018,  the  volume  of  foreclosed 
assets decreased by another EUR 3.3 billion in the 
first half of 2019. This brings the rate of decline of 
foreclosed assets from the high in 2011 to 50%.  

21.  Further  progress  has  been  made  in  the 
restructuring of the banking sector. The Spanish 
banking  sector  continues  optimising  its  business 
model  and  lowering  its  cost  base.  Between  end-
the  number  of  credit 
2012  and  mid-2019, 
institutions and CFIs declined by one third (to 237 
in  total)  and  stagnated  in  2019.  During  the  same 
period,  the  branch  network  shrank  by  more  than 
30%  (to  25,759  in  total,  including  rep  offices), 
whilst  the  number  of  employees  fell  by  20%  (to 
187,182)  between  end-2012  and  end-2018. 
According to ECB data, Spanish banks have higher 
cost  efficiency  than  the  EU  average,  with  an 
average cost-to-income ratio of 54.3% vs. 64.7% at 
EU level (June 2019). 

(21)  Financial Stability Report, Autumn 2019, BdE 

https://www.bde.es/f/webbde/INF/MenuHorizontal/Publica
ciones/Boletines%20y%20revistas/InformedeEstabilidadFi
nanciera/IEF_Autumn2019.pdf   

13 

        
                                                           
                                                           
 
Graph 3.7: 

Bank sector profitability for domestic 
operations 

Profit before tax
Total provisioning
Operating income (before provisioning)

Bn EUR

100

80

60

40

20

0

-20

-40

-60

-80

10

11

12

13

14

15

16

17

18

19

Source: BdE, own calculations. 

than 

levels 

required 

23.  Spanish  banks’  capital  position  remained 
stable. The common equity tier 1 (CET 1) ratio of 
Spanish  banks  according  to  ECB  data,  increased 
from 11.8% at H1-2018 to 12.2% at H1-2019 and 
remained  below  the  EU  average  (15.0%)  but 
higher 
for  all  credit 
institutions.  As  regards  the  fully  loaded  CET1 
ratio, based on EBA data ( 23), the gap with the EU 
average  was  2.8  percentage  points  (11.6%  vs 
14.4%). The total capital ratio also increased by 30 
bps to 15.3% by end June 2019. Finally, the capital 
position of Spanish banks shows a better picture on 
a  non-risk  weighted  base,  as  their  leverage  ratio 
(24)  ranked  similarly  to  the  EU  average  (5.6%  vs. 
5.4% as of end June 2019 according to EBA data). 

(23)  EBA data only takes into consideration the most significant 

banks in each jurisdiction. 

(24)  The  leverage  ratio  is  a  non-risk-weighted  measure  of  the 
capital  position  of  a  bank:  ‘Tier  1  capital  /  leverage 
exposure’. 

European Commission 

Post-Programme Surveillance Report 

Graph 3.6: 

Ratio of non-performing loans 

%

40

35

30

25

20

15

10

5

0

10

11

12

13

14

15

16

17

18

19

Total
Construction
Household loans

Productive activities
Real estate activities
Home and mortgage loans

(1) The scope of non-performing loans covered in these 
figures overlap with BdE's definition of doubtful loans. 
(2) Home loans comprise also loans that are not mortgages 
Source: BdE, own calculations. 

22.  The  profitability  of  the  Spanish  banking 
sector remained under pressure in the first half 
of 2019, as in other European countries. Deposit 
taking 
institutions  registered  a  net  profit  of 
EUR 5.7 billion  in  the  first  half  of  2019.  The 
consolidated profit attributed to the parent entity of 
the  Spanish  banking  system  were  11.5%  lower 
than  a  year  earlier  (22),  which  translated  into  a 
decline  in  the  return  on  assets  (ROA)  by  8  bp,  to 
0.49%.  The  return  on  equity  (ROE)  also  fell 
slightly  (by  +1  pps  y-o-y,  down  to  6.6%)  for 
Spanish banks. 

(22)  Financial  Stability  Report,  Autumn  2019,  BdE; 
https://www.bde.es/f/webbde/INF/MenuHorizontal/Publica
ciones/Boletines%20y%20revistas/InformedeEstabilidadFi
nanciera/IEF_Autumn2019.pdf 

14 

        
                                                           
     
                                                           
4. 

FINANCIAL SECTOR REFORMS AND POLICY  

4.1. 

SAREB – RECENT DEVELOPMENTS AND 
OUTLOOK 

24.  SAREB’s ( 25)  asset  recovery  is  progressing 
but  at  a  slower  pace.  After  43%  of  SAREB’s 
expected  lifetime,  34%  of  assets  have  been  sold 
and  30%  of  senior  debt  has  been  repaid.  From  its 
inception 
in  2013  until  mid-2019,  SAREB 
managed  to  reduce  its  loan  portfolio  from  EUR 
39.4 billion to EUR 20.8 billion, of which 96% is 
NPL. The stock of the real estate portfolio slightly 
rose  from  EUR  11.3  billion  to  EUR  11.7  billion. 
This  was  due  to  the  fact  that  there  was  a  similar 
amount  of  sales  of  real  estate  properties  as  there 
foreclosed 
were 
properties.  The  senior  debt  of  SAREB,  which 
enjoys  state  guarantee  and  is  held  by  banks  that 
had received state aid, was reduced from EUR 50.8 
billion  to  EUR  35.8  billion  by  30  June  2019. 
SAREB  has  time  until  2027  to  liquidate  the 
remaining portfolio, but sales have recently slowed 
down,  partly  due  to  the  moderating  real  estate 
market  activity  but  also  the  new  strategy  of 
SAREB. 

loans  converted 

into  new 

25.  SAREB’s  new  strategy  aims  to  deliver 
higher recoveries but might entail higher costs, 
more  risks  and  may  need  more  time.  As  NPL 
sales last year became slower and more expensive 
(larger  discounts),  SAREB’s  Board  decided  to 
move away from NPL sales and rather recover real 
estate  collaterals  with  in-house  capacity.  On  the 
one  hand,  this  strategy  might  entail  higher  costs, 
such  as  one-off  investment  to  build  in-house 
capacity as well as operational costs for managing, 
maintaining and improving foreclosed real estates. 
On the other hand, it will allow SAREB to directly 
control  and  monitor 
its  assets  and  decrease 
servicing fees. However, the remaining real estate 
seem  to  be  of  lower  quality  and  less  liquid  than 
are 
sold.  They 
those 
scattered 
already 
geographically, 
in  non-prime 
in  many  cases 
locations.  A  considerable  part  of  them  is  on 
undeveloped  land,  which  needs  fresh  investment 

(25)  SAREB (Sociedad de gestión de Activos procedentes de la 
Reestructuración  Bancaria) 
is  an  asset  management 
company  that  was  created  to  divest  the  assets  transferred 
from the old savings banks and help the economy recover. 
54% of its share capital is owned by private shareholders, 
but  the  main  shareholder  (46%)  is  the  public  Fund  for 
Orderly Bank Restructuring (FROB). 

time  (in 

administrative  work.  The 
take 

foreclosure 
and 
procedures  also 
the  corporate 
insolvency  cases  up  to  6  years).  Furthermore, 
whereas the strategy was initially supported by the 
recovering real estate market in 2018, the upswing 
moderated  in  the  first  half  of  2019,  and  price 
increases  have  slowed  down.  Overall,  this  poses 
the  planned 
risks 
recoveries  within  SAREB’s  lifespan,  i.e.  by  end 
2027.  Consequently,  the  implementation  of  this 
strategy  requires  close  and  regular  monitoring, 
with, if needed, appropriate adjustments.  

the  materialisation  of 

to 

26.  SAREB managed to sell 75% of its stake in 
Témpore  Properties  as  part  of  its  divestment 
strategy.  This  vehicle  was  created  at  the  end  of 
2017 
to  manage  SAREB’s  residential  rental 
portfolio.  It  is  listed  on  the  alternative  stock 
exchange  and  SAREB  used  to  own  98.4%  of  the 
entity. By October 2019 SAREB had sold 75% of 
its  stake  as  part  of  its  more  general  divestment 
strategy. 

4.2. 

PROGRESS WITH FINANCIAL SECTOR 
REFORMS AND CHALLENGES AHEAD 

stabilisation 

27.  Macro-financial 
has 
continued, yet emerging risks need to be closely 
monitored.  The  Spanish  economy  continued  to 
grow, yields have decreased and Spain’s sovereign 
rating has been raised. The financial sector reform 
and  stabilisation  policies  have  been  maintained. 
However,  economic  growth  is  weakening,  real 
estate  market  activity  has  moderated,  and  banks’ 
profitability  remains  affected  by  the  very  low 
interest  rate  environment.  The  banking  sector’s 
legacy  assets  (NPL  ratio)  are  still  higher  than  the 
EU average (3.4% H1 2019 versus 2.9% by ECB). 
Furthermore the loss-absorbency capacity of credit 
institutions in terms of profit is more limited due to 
the  currently  narrow  margins.  Although 
the 
sector’s  high-quality  capital  ratio  is  comfortably 
higher 
for  all  credit 
institutions, it is the lowest in the euro area (CET1: 
11.9%  versus  14.6  at  H1  2019  by  EBA).  Credit 
standards  and 
the  performance  of  post-crisis 
production of credit needs to be closely monitored, 
especially as regards riskier portfolios.  

required 

levels 

than 

28.  There are legal risks of some relevance for 
economic 
certain 

institutions.  The 

credit 

15 

                                                           
European Commission 

Post-Programme Surveillance Report 

consequences  of  litigation  had  been  sizeable  for 
many  credit  institutions  in  the  aftermath  of  the 
financial  crisis,  mainly  due  to  compensation  that 
had  to  be  paid  to  consumers  for  the  use  of  unfair 
terms 
the 
in  consumer  contracts.  Although 
economic  consequences  of  litigation  concerning 
IPOs  and  preferred  shares  have  already  been  paid 
or provisioned, other risks especially regarding the 
applied  interest  rates  on  some  mortgages  (i.e. 
IRPH) could emerge depending on the final ruling 
by the European Court of Justice (ECJ).   

to  maintain 

29.  The  BdE  continued  keeping  the  counter-
cyclical  capital  buffer  (CCyB)  at  0%.  On  30 
September  BdE  decided 
the 
countercyclical  capital  macro-prudential  buffer 
unchanged at 0% for the fourth quarter of 2019, in 
light  of  the  evolution  and  subsequent  analysis  of 
credit  indicators.  The  latest  available  data  of 
March 2019 shows that the credit-to-GDP gap was 
negative  (-7.8 pps.)  and  BdE  expects  it  to  be 
positive only in 2021. 

30.  The  MREL  targets  set  based  on  the  bank 
recovery  and  resolution  directive  (BRRD)  may 
pose  some  challenge  for  some  smaller  Spanish 
banks.  Resolution  plans  have  been  drafted  or 
approved 
including 
for  all  Spanish  banks, 
significant,  less  significant  and  small  institutions. 
MREL  requirements  for  significant  institutions 
(SIs)  with  resolution  colleges  will  be  updated  in 
Q4  2019,  while  SIs  without  resolution  colleges 
already  received  them  earlier  in  2019.  Priority 
institutions  and  less  significant  institutions  (LSIs) 
will  receive  their  MREL  requirements  in  2020. 
According to BdE, LSIs may face some challenges 
when raising the required funds. 

31.  FROB  remained  cautious  with  its  Bankia 
privatisation  approach.  FROB  management’s 
strategy  continues  to  focus  on  trying  to  balance 
between  the  government’s  objective  of  disposing 
of  its  controlling  stake  in  Bankia  and  that  of 
maximising the recovery of public money. 

16 

ANNEX A 

Main macroeconomic and financial indicators 

Table A.1:  Main macroeconomic and financial indicators 

Core indicators
GDP growth rate

  of which domestic demand incl. stocks

Private consumption (annual % change)

Public consumption (annual % change)

HICP (annual % change)

Unemployment rate (% of labour force)

Gross fixed capital formation (% of GDP)

Gross national saving (% of GDP)

General Government (% of GDP)
Balance (g)

Gross debt

Interest expenditure

Households
Households saving rate

Rest of the world (% of GDP)
Trade balance

Trade balance, goods 

Trade balance, services

Current account balance

Net financial assets

2000
-2007

2008
-2013

2014

2015

2016

2017

2018

2019
(f)

2020
(f)

2021
(f)

3.7

4.5

3.7

5.0

3.2

10.3

27.7

22.3

- 1.3 

- 3.1 

- 2.1 

0.9

2.2

20.2

21.4

18.8

1.4

1.9

1.7

- 0.7 

- 0.2 

24.5

17.8

19.6

3.8

3.9

2.9

2.0

3.0

2.0

2.7

1.0

- 0.6 

- 0.3 

22.1

18.0

21.0

19.6

18.0

21.9

2.9

3.0

3.0

1.0

2.0

17.2

18.7

22.1

2.4

2.6

1.8

1.9

1.7

15.3

19.4

22.3

1.9

1.3

0.8

2.0

0.9

13.9

19.8

23.1

1.5

1.3

1.0

1.5

1.1

13.3

20.1

23.5

1.4

1.3

1.0

1.4

1.4

12.8

20.3

23.7

0.4

- 8.8 

- 5.9 

- 5.2 

- 4.3 

- 3.0 

- 2.5 

- 2.3 

- 2.2 

- 2.1 

46.7

67.6 100.7

99.3

99.2

98.6

97.6

96.7

96.6

96.0

2.2

2.4

3.4

3.0

2.8

2.5

2.4

2.3

2.1

2.0

8.9

8.9

6.3

7.2

7.1

5.5

5.9

7.8

8.6

8.9

- 3.7 

- 6.8 

3.1

- 0.1 

- 4.1 

4.0

- 5.9 

- 2.9 

3.1

3.0

4.0

3.6

2.7

3.2

3.3

3.3

- 2.1 

- 1.9 

- 1.3 

- 1.9 

- 2.4 

- 1.9 

- 1.7 

- 1.7 

5.2

1.7

5.0

2.0

5.3

3.2

5.5

2.7

5.2

1.9

5.0

2.4

5.0

2.5

5.0

2.6

- 55.3 

- 90.4 

- 95.1 

- 88.2 

- 84.7 

- 84.8 

- 79.8 

Net international investment position (h)

- 56.5 

- 91.6 

- 95.9 

- 88.9 

- 85.5 

- 85.5 

- 80.4 

Competitiveness (index, 2010=100)
Real effective exchange rate relative to the 
rest of the euro area
Real effective exchange rate relative to the 
rest of the European Union
Real effective exchange rate relative to the 
rest of 37 industrialised countries
Banking sector
Assets (% of GDP)

94.8

97.9

91.1

90.8

89.3

89.2

88.5

89.3

89.5

89.6

92.8

97.7

90.7

89.4

88.9

89.0

88.4

89.0

89.0

88.8

91.9

98.3

91.7

88.1

87.2

88.0

88.6

88.2

87.7

n.a.

214.9 325.0 288.0 262.5 244.9 234.4 220.0

Private domestic credit (y-o-y %)

17.8

- 3.0 

- 6.5 

- 4.2 

- 4.1 

- 2.0 

- 3.9 

Non-performing loans (NPLs), total (%) (i)

NPLs, productive activities (%)

 " of which, construction, and (%)

 " real estate activities (%)

NPLs, residential mortgages (%)

Tier 1 ratio (%)

Interest rates
10 year spread vis-à-vis the Bund (%)

CDS 5 year (basis points)

Updated on 07 Nov 2019

1.0

1.8

0.9

0.5

0.5

n.a.

7.7

14.7

17.3

19.8

3.5

9.8

12.5

25.6

32.6

36.2

6.1

10.1

20.9

30.0

27.5

5.0

9.1

19.2

29.1

25.5

4.8

7.8

16.5

24.1

18.1

4.9

5.8

12.8

13.7

9.6

4.3

11.7

12.6

12.9

13.2

13.5

0.1

2.1

1.5

1.2

1.3

1.2

0.9

n.a. 221.5

90.5

84.1

82.1

67.4

62.6

(f)  Commission 2019 autumn forecasts 
(g) General government balances include capital transfers related to support of banks 
(h) ESA2010 and BPM6 
(i)  NPLs: ratios, in % of total loans 
Source: Ameco, BdE, Bloomberg, Boursorama, Eurostat, Macrobond. 

17 

 
 
 
   
 
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