Financial Safety Advice

Financing costs have decreased easing the financial burden of the private sector. However, the bleak outlook is working to increase the financial burden borne by some segments, connected to over-indebtedness of households and companies and the urgent need for restructuring the financial package will have to slow the pace of lending.

It is the conclusion of the annual report on financial performance of Spain presented by the regulator. The report also emphasizes that delinquency is not yet seem to have reached its cyclical peak.

However, the picture drawn by the Bank of Spain on the financial system is positive, although the position of the entities differ in the degree of exposure of bad assets on their ability to cope with the necessary commodities.

Meanwhile, the debt of the sectors with residence in Spain (corporations and households) are below levels a year ago due to brake loan requests and the lack of risk aversion, which led to the institutions consider that a higher proportion of applications was for non-solvent demand.

At a general level one can distinguish between insurers (that we will discuss in another article) and banks.

In Spain there are four general types of banks:

Private institutions banks are usually publicly traded company, and is used mainly to mortgages and accepting deposits.

Savings. Are virtually identical to the banks except two characteristics:

1. Are public institutions owned by one or more government (municipality, region, county council, etc).
2. They do not pay taxes, but instead are required to distribute at least one third of its profits to works of social interest.

Credit unions. Are very similar to the savings banks, in fact it is often difficult to distinguish because they also adopt the name “box.” The main characteristic of these entities that are not public property, are actually owned by a “financial cooperatives.” Credit unions are often associated with a cooperative association or industrial or sectoral, so for example the Fund is linked to the Lawyers Bar Association. Read the rest of this entry →