The financial reform inspired banks to resume jockeying for clients and get financing by increasing interest on deposits.
Gone are the catches (contributing a much higher amount to the Deposit Guarantee Fund) that Spain?s last administration approved over a year ago in order to penalize this practice. Because money was lost in that deposit war.
After the legal barrier is abolished, Banco Popular is going to start the war for deposits. Many banks will join in an effort to increase their liquidity. This will be a double-edged sword. If a nationalized bank enters the struggle, it will do so with taxpayer money.
The government should be watch closely, because the situation has not changed dramatically and the same risks exist today as several months ago.
