or even a single region subject to a subdued macroeconomic performance in the recent past. third, regulation. banks are now facing new requests to raise more and better - quality capital. more importantly, significant institutions will have to hold on their balance sheets substantial volumes of liabilities that could be subject to bail - in. clearly, those retail banks with little or no tradition in issuing capital and other securities in capital markets will have particular difficulties coping with the enhanced regulatory framework. admittedly, though, the corporate structure of many retail banks - particularly those which are not yet regular corporations listed in capital markets - may face less immediate pressure to restore higher profitability levels. that may allow them to buy some time. 3 / 5 yet, low sustained profitability is often a symptom of vulnerability and, certainly, of inefficient allocation of the resources employed in the banking business. there is therefore a need to reflect on the best way to strengthen retail banks, to make them better able to cope with the new macroeconomic and regulatory conditions without damaging the social benefits associated with their activity. it would be unsound to try to establish specific strategies with the pretention to be unconditionally applied in all circumstances. however, i see some difficulties for numerous retail banks in adapting to the low - profitability and tighter regulatory environment if they are not able to increase their ability to compete with banking corporations in terms of costefficiency, business diversification and access to capital markets. some transformation of the retail and, in particular, the saving banking sector therefore seems unavoidable in order to meet the target. we, in spain, have already taken some steps in that direction. as you well know, in response to the financial crisis, measures were taken along different lines, which helped solve the main shortcomings affecting the spanish banking sector at that moment in time and positioned it in a good starting point for the implementation of the ssm. in addition to measures taken to reduce the level of exposure to real estate development and to drive greater consolidation in the sector, a major effort was made in the field of recapitalisation, which went beyond the actions taken by public authorities. since 2008, the sector has set aside new provisions for outstanding loans or foreclosures for approximately €300 billion. and, after absorbing this substantial balance sheet clean - up into results or reserves, banks have managed to increase their own funds by approximately €70 billion over the same period.

and international organisations, suddenly turned into a collapse of all macroeconomic indicators. that obliged banks and savings banks to accelerate the clean - up of their balance sheets and to set in train what has ultimately become a full - fledged industrial restructuring of the spanish banking system. bis central bankers ’ speeches the toolkit at hand, which had been successfully used in the past, was not up to facing a crisis of this nature. the legislation on bank resolution had not been adapted to the demands of the monetary union, in particular to the prohibition of monetary financing, and nor did it envisage that it was savings banks that would essentially need to be repaired. moreover, the singularity of a systemic crisis, on a global scale and with absolutely unrestricted capital movements, made it impossible to make creditors take haircuts without running the very serious risk that market alarm would ultimately lead healthy institutions to sink. our main strength – one by no means insubstantial – was that the large credit institutions were reasonably sound and that the problems were concentrated in a clearly defined group of small and medium - sized institution. so as to be able to have a new toolkit adapted to this crisis, more than half a dozen laws1 had to be approved, from first creating the fund for the orderly restructuring of the banking sector ( frob ) in 2009 to the last decree law approved in february, with regulations that have set about righting the shortcomings. these include the creation of an institution / fund allowing for the obligatory and orderly restructuring of non - viable banks and encouraging the merger of viable ones ; the regulation of institutional protection schemes ; the possibility of converting savings banks into banks ; new capital requirements to speed through restructuring ; the granting of greater powers to the banco de espana ; the merger of the deposit guarantee funds, etc. promoting all these changes in a full - blown crisis was like negotiating twin tasks on a ship that has hit the rocks : while evacuating the passengers, it was necessary to repair the lifeboats. a most difficult task, as i said, but the seven laws have now been passed. and there is one very positive aspect, namely that all these regulations have had the backing of the country ’ s two main parties. this is perhaps why these reforms have maintained a series of common characteristics and, while giving due merit to the main actors, i. e. the different governments and the legislative chambers, mention might be made of the advice that the banco de espana has offered and continues to offer