Santander just augured a contraction of credit with its quarterly results, and its subsidiary Banesto has also confirmed that it expects to earn 7% less. The lender directed by Cantera has improved its solvency levels by trimming their balance sheet, that is to say, not granting more loans. This diminishes the bank and requires them to keep fewer capital reserves. The reinforcement strategy is wise considering the looming economic uncertainty.
We are still fearful that the group of lenders is going to do the same and that is going to translate into an even bigger credit drought during 2012. Growth will stagnate, mostly new initiatives.
The Bank of Spain has put the ball in play, but accounts are not cleaned up and resources are still being tied up by those who do not pay.
