International exposure of the Spanish banking sector and the economy

The Banco de España analyses the exposure of the Spanish economy to ‘third countries’ outside the European Economic Area (EEA), in which Spanish credit institutions have significant exposures. Brazil, Chile, Colombia, the United States, Mexico, Peru, the United Kingdom and Turkey are the most relevant third countries for the Spanish banking system. Of note is the exposure to the United Kingdom in most banking and economic variables and to the United States, both in trade in goods and services and in investment flows from Spain.

Main findings of the report:

• Significant exposures of Spanish banks in third countries: from a banking regulation and supervision perspective, identifying third countries where banks have material banking exposures is relevant insofar as banks are affected by macro-financial developments in these countries and these may have an impact on their capital levels.  In particular, this analysis is relevant for the Bank of Spain for the purposes of the countercyclical capital buffer.
  
  - Spain's external positioning in countries outside the EEA identified as material for the banking system is mainly concentrated in the United Kingdom, where the value of assets and liabilities represents 20% and 23% of total exposure in the relevant third countries. Mexico, the United States and Brazil come next, with exposure values just over 10% of the total.
  
  
• Exposure of the Spanish economy to those third countries where Spanish banks hold significant positions:
  
  - Exports of goods and services: Spain exports goods mainly to the United Kingdom (5.9% of total Spanish exports to relevant third countries), the United States (4.9%) and, to a much lesser extent, Turkey (2.3%) and Mexico (1.5%). In terms of exports of services, the United Kingdom is close to 13.5% of the total (18.5% in the case of exports of tourism services, for which it is the main destination country, also including non-material countries).
  
  - Imports of goods and services: With regard to Spanish imports of goods, the United States is the material country where Spain has the greatest exposure (almost 7%), with the United Kingdom (2.5%) and Turkey (2.2%) also showing some relevance. In the case of Spanish imports of services, exposure to the United Kingdom (9.1%) and the United States (7.7%) stands out. In the rest of the material countries, only in the case of Mexico is the share above 1%.
  
  - Spanish Foreign direct investments (FDI) in third countries: The United Kingdom has received almost 18% of the total and the United States more than 15%. Likewise, in Mexico and Brazil the accumulated stock stands at around 9% of the total.
  
  - FDI inflows to Spain: the United Kingdom stands out notably, with over 12%, and, to a lesser extent, the United States (4.7%) and Mexico (2.6%), while the rest of the material countries according to the Bank of Spain's terminology (Brazil, Chile, Colombia, Peru and Turkey) having much lower percentages.