The Bank of Spain surprised the financial industry in a report released last Tuesday. Insignificant increase in deposit rate, Spanish banks it’s not just about that excess liquidity as beings shake, but at the same time concentration level of the sector. Alejandra Kindelán, president of the employers’ association AEB, quickly denied this the next day: “There is too much competition in Spain.” The reality is that the degree of banking concentration in the country went from low to medium for the first time in 2018, but it is still far from high or alarming. Although it is true that fourth member European Union 26 (no data for Croatia) where more competition reduced Since the creation of the euro in 1999.
The European Central Bank (ECB) released its full annual statistics on the level of banking concentration in different EU countries on Thursday. traffic light banking competition Thus, in Spain last year it remained moderate, but intensified its influence. yellow color. As a general rule, the ECB estimates that a level below 1,000 means low concentration, while a level between 1,000 and 1,800 is considered a medium concentration, and above 1,800 considers a high concentration. In Spain, it rose from 1,271 last year to 1,327.
These are the levels indicated by the Herfindahl and Hirschman index, which are used by the world’s major antitrust organizations to analyze the state of a market and approve or disapprove of mergers submitted to them. It is calculated by squaring the market share each company has and adding these amounts. more weight to the largest companies. A maximum value of 10,000 implies that a monopoly has been formed.
increase to say
In 1999, the first year the central bank provided data, the Spanish financial sector was as low as 427 and barely rose to 459 in 2007, a year before the Great Financial Crisis broke out. Conclusion the disappearance of dozens of beings absorbed by the more powerful (out of 45 to 10 relevant banks) causing the index to jump by 900 integers to 1,327 by the end of 2022. This is the fourth largest increase in concentration in the EU since 1999, only Cyprus, Greece and Latvia. It fell in eight countries over the same period, including Estonia, Belgium, Malta and Denmark.
Thanks to the low beginner level, yes, Spain is in the middle of the table in terms of degree of concentration., 12th in the EU there are actually seven countries with red traffic lights: Cyprus (2,670), Finland (2,340), Greece (2,244), Estonia (2,244), Netherlands (2,194), Lithuania (1975), and Latvia (1941) . Although there are also countries with a much lower concentration than Spain, such as Luxembourg (316), Germany (326), Austria (424), France (606) and Italy (760).
Another indicator followed by the ECB is the market share of the five main institutions, which also reflects the concentration in the Spanish system. In this case, it jumped from 40.3% in 1999 to 69.59% last year, which was the second largest increase (29.29 percent) recorded in the EU at that time, than only that recorded in Cyprus (31.48 percent). points) behind. In absolute terms, Spain ranked 14thFar from Greece (95.72%), Cyprus (91.94%) and Estonia (90.81%), but Luxembourg (31.16%), Germany (35.01%), Austria (40.06%) ), far ahead of France (46.44%) and Italy (50.5%).
market power
This indicator is exactly the indicator used by the Bank of Spain to analyze the impact of banking concentration. greater or lesser increase in banks’ deposit rates compared to what is reasonable to expect based on historical experience. According to the report, with businesses transferring the increase in Euribor less to deposit rates, “higher degree of market concentration“, but the relationship in question is “weak” compared to sectors with higher liquidity.
Thus, the document reflects that rates increased less than expected in countries where the five big banks have larger market shares, such as Greece, Portugal, Spain or Ireland. On the other hand, the deviation was smaller in other countries where large organizations had less weight, such as Germany, Austria and France. However, there are cases where parent companies such as Belgium, Finland and the Netherlands have a high share and the ratios are predictably higher.
Despite all this, Kindelán denied that the slightest increase in the deposit rate could be “related” to a lack of competition in Spanish banks. “According to scientific indices measuring competition like Herfindahl, there is still a lot of room to reach an alarming level of concentration. There is no concentration anxiety in the sector and there is a lot of competition because there are large, small and medium-sized competitors, and at the local level this is very remarkable,” Economists said.