- 2012. alongside the most notable clean - up and provisioning drive, a recapitalisation and restructuring strategy was applied based on the analysis of balance sheets and on the tests based on stressed macroeconomic scenarios which concluded a year ago. this was all done in collaboration with the european commission, the ecb, the imf and the european banking authority, in the presence of independent consultants and auditors, and with the participation of the banco de espana supervisory and regulatory teams, which was technically very important for the performance of the exercise. the recapitalisation of our banks has been carried out through private access to markets ; the injection of capital financed via the financial assistance programme agreed with the european authorities ; the conversion of hybrid instruments into capital instruments ; and the provision of funds by the frob ( fund for the orderly restructuring of the banking sector ) and the deposit guarantee fund. from may 2009 to last september, the public assistance afforded to financial institutions to reconstitute their capital amounted to a somewhat over €61 billion ( 6 % of our 2012 gdp ), close to €39 billion of which were under the financial assistance programme approved with the european authorities in july 2012. the essential aim of these recapitalisation operations using public funds has been none other than to preserve the deposits in the institutions in question ( as is widely known, these are the only bank liabilities not to have undergone any loss throughout the process ), providing for business continuity by these institutions ’ own means or by their absorption by others. this is a crucial point i wish to highlight, as it is not always well - understood. regarding transparency, i would signal the initiatives taken by the banco de espana, which have been favourably viewed by the european and international authorities and by the markets, on relevant exposures and refinanced loans. and mention should be made of the guidelines on accounting practices in respect of refinanced loans. finally, i wish to underscore the approval of law 9 / 2012 of 14 / 2012 on the restructuring and resolution of credit institutions. to a most significant extent, this legislation stole a march on the future directive that will regulate these processes in europe. spanish banks ’ solvency position has improved clearly in 2013. the average core capital in our banking system will stand at around 10. 5 % as at december 2013, more than 1 pp above the related figure a year earlier. and, at the same time, exposure to the real estate sector has diminished drastically

income in 2000 to close to 130 % in 2007 and 2008. non - financial corporations moved on a bis central bankers ’ speeches similar path, which lasted longer over time, with their debt ratio climbing from over 60 % of gdp in 2000 to a peak of over 140 % in 2010. here, too, there are signs of correction. since 2010, households ’ and firms ’ debt has fallen by almost 10 pp and 20 pp, respectively. admittedly, though, such restructuring is slow as a result of weak nominal growth in household and corporate income. but the soundness of the recovery will unquestionably also depend on the progress made in normalising financing flows. since 2009, outstanding credit extended by our banking system to spanish non - financial corporations and households has been contracting uninterruptedly. as at september 2013 it was 5. 4 % lower than a year earlier, but the decline was more marked for firms than for households : a decline of somewhat more than 9 % for the former, and of 4. 5 % for the latter. as to firms, the reduction was more marked in the case of small and medium - sized enterprises ( smes ), whose access to other financing sources is generally more limited. this fall - off in credit should be viewed set against the correction of the excess debt built up by spanish households and firms during the expansionary phase that ended in 2008. deleveraging has been necessary both on the part of lenders and of borrowers. but this credit contraction should also be viewed in relation to the end of the – what was unsustainable – expansion of the real estate development and construction sectors. and of no little importance, moreover, has been the re - drawing of the map of spanish credit institutions – i refer here to the disappearance or transformation of many savings banks – which has, in a good number of cases, necessitated the re - configuration of relations between lenders and borrowers and has no doubt had a bearing on the funding difficulties experienced by viable firms with sound expansion projects. for credit to flow normally again, two essential conditions must be met : economic growth must increase and the restructuring and recapitalisation of our banking system must – as is indeed under way – be completed. a strong, healthy banking system that acts transparently and offers full guarantees to depositors, borrowers and investors is an absolutely crucial condition for sustained economic growth and, therefore, for the correction of our very serious unemployment problem. i must not fail