The current banking environment in Spain is an accumulation of positive news, coming hard on the heels of three years of solid economic growth. The country’s banks have been steadily reducing their stock of non-performing assets (NPAs) – though for most, this task still remains a challenge.
“[Banks] will need to accelerate divestment of these NPAs more aggressively, and not just through organic reduction,” says Elena Iparraguirre, director of bank ratings at Standard & Poor's. “They are transferring their NPA portfolios to institutional investors, as is the case of Santander with Popular, while BBVA has reduced by 80% its stock of foreclosed assets. We would expect to see others following this trend, especially in view of regulatory pressures from the European Central Bank [ECB].”
