Hernández de Cos asks for aid to improve the solvency of companies: “The damaging effect on banks must be minimized”

The Governor of the Bank of Spain, Pablo Hernández de Cos, calls on the Government for a shift in the economic stimulus policies used to deal with the effects of the coronavirus to focus on the solvency problems that already drag thousands of companies.

“The persistence of the crisis has caused companies to be clearly in a much more indebted situation because the most used support instruments were credits guaranteed by the ICO. Today their demand prospects are still low and we cannot continue to focus on the same type of instrument, but rather go from supporting liquidity to alleviating solvency problems “, he explained during his speech at a meeting organized by the Alianza por Iberoamà © rica Business Council (Ceapi).

According to the governor, the priority objective of these aid should be to avoid further destruction of the productive fabric when the economy is already approaching the recovery phase due to the heat of the vaccines. However, De Cos recalled that stimuli must continue to prioritize the preservation of the stability of the financial system to avoid a deeper and more persistent crisis.

“We must minimize the damaging effect on banks. That is why we defend the maintenance of stimuli towards an improvement in solvency. In the event that we were not able to avoid a strong increase in non-performing loans, it is important that in Europe, let’s not lose the perspective that the answer is global and let’s not look for solutions from a national point of view “, has responded to questions from a telematic audience made up of sector executives such as Josep Oliu, Chairman of Banco Sabadell, and moderated by the Chairman of Unidad Editorial, Antonio Fernández-Galiano.

The governor of the Bank of Spain has also delved into the need to carry out an analysis to find out which companies will be able to adapt to the structural changes that the crisis has brought about and which ones do not have future prospects and therefore therefore they must be extinguished. Banking, supervisor and the Ministry of Economy are working on formulas to speed up the identification of these companies called ‘zombies’, as this newspaper has already advanced.

‘Hotel business, small, young and urban’: The most punished company profile

The financial regulator has published an analysis this Thursday in which it identifies the profile of the society most damaged by the outbreak of the coronavirus and offers the economic vice president Nadia Calviño details on where the new aid mechanism for 11,000 million euros announced by Pedro Sánchez should focus.

The portrait made points to a small company in less than 10 workers, Dedicated to hostelería, with a few years old and located in the urban environment as the one greatly affected by the crisis.

The Bank of Spain it confirms the asymmetric impact of the crisis by sector and by region depending on the amount and duration of the sanitary restrictions approved in the last year. In this sense, activities such as hospitality have seen reduced your average billing by 45% and there are regions more exposed to tourism such as Canary and Balearic Islands where the impact has been even greater.

But not everything is the sector or the location area. “The results show that, beyond the differences observed by branches of activity and by regions, the characteristic with the greatest capacity to explain the differences between companies in the impact of the health crisis is their tamaño”, says the regulator based on the more than 4,000 responses obtained in a recent survey conducted on business activity.

Other factors that have influenced the impact are age – the ‘young’ have suffered the most – and their presence in urban environments most affected by sanitary restrictions. “Compared to the hotel industry, manufacturing companies are, on average, a 40% more productive and eight years older; they are most often located in a rural setting; they have less debt, and their size, measured by the number of employees, is higher, “explains the analysis.