Spanish banks borrowed €126.3 billion from the European Central Bank in June, the Bank of Spain said yesterday, revealing a record figure as institutions struggle to refinance on international markets.
The amount borrowed last month rose by 78.6 per cent from the amount at the same time last year and represents a rise of 47.5 per cent over the amount borrowed in May, figures published on the website of Spain’s central bank showed.
Spain is a member of the eurozone but is also in the front line of concern about the resilience of its banking system, and of concerns over the scale of public deficits and debt.
It was the highest amount borrowed in a one-month period by Spanish banks from the Frankfurt-based ECB since the Bank of Spain started publishing the figures when the eurozone was launched in 1999.
The rise in borrowing by Spanish banks comes as the total amount lent by the ECB to financial institutions in the entire 16-nation eurozone in June dropped to €496.7 billion from €518.6 billion in May and from €615.9 billion during the same time last year.
Last month the Bank of Spain’s deputy governor Javier Ariztegui told a parliamentary commission that since Easter Spanish banks had been forced to seek financing from the ECB because of lack of market confidence in Spain.
“This situation cannot last an eternity,” he said.
The health of Spain’s banking sector has been a source of concern for international investors since the collapse of a property bubble at the end of 2008 which had been a driver of over a decade of economic growth.
The solidity of Spanish financial institutions will be revealed when European officials publish bank stress tests on July 23.
EU regulators are examining the strength of 91 banks in an attempt to reassure investors about the institutions’ resilience to potential losses as the debt crisis pummels the bonds of Spain, Portugal and Greece.
Fitch credit rating agency downgraded its long-term notation for Spanish bank Banco Popular by two notches on Wednesday and its short-term rating by one notch.
It said its decision was motivated by the effect of weak performance by the Spanish economy on the bank.