CECA positively assesses the closure of the legal framework for banking foundations
The entities now have a stable regulatory framework to continue facing the challenges of the current economic and financial environment.
The approval of the Bank of Spain Circular on Banking Foundations concludes the process of developing the legal regime of the sector initiated with Law 26/2013 and the implementing Royal Decree. CECA has actively collaborated in this process. Thus, the entities now have a stable regulatory framework to continue facing the challenges of the current economic and financial environment.
The intense regulatory changes have run parallel to the restructuring and consolidation process of the financial sector. During this period, financial entities have taken a series of measures that have led to significant advances in solvency and efficiency.
Since the beginning of the crisis, the sector has decreased from 45 entities with an average asset volume of 29 billion euros to 12 entities or groups of entities, with an average asset volume of 93 billion euros in 2015. This process has been accompanied by an intense reduction of the installed capacity, a fact that has been especially visible in the rationalization of branch networks and central services. In this sense, between 2008 and September 2015, the number of offices has been reduced by 39%. This adjustment has allowed notable progress in the efficiency ratio, which stood at 50.7% in June 2015, improving by 8 percentage points from the 2013 level.
Furthermore, during this same period, the entities associated with CECA have considerably strengthened their solvency levels. The CET 1 ratio for the entire sector rose to 12.4% in June 2015, nearly 2 percentage points above the ratio recorded in 2013.
Lastly, the significant effort in write-offs and provisions made between 2008 and December 2014 by the entities is noteworthy: up to 140 billion euros (14% of GDP).
The stability in the legal framework and more solvent entities now allow for a financial sector better prepared for integration into the European market and other challenges.
