This share prices have a 15 minute delay and are shown in the local time of the market in which the quote is displayed.
The impact of the Covid-19 crisis on Spanish companies' financial situation
According to Bank of Spain estimates, the COVID-19 crisis has increased the number of companies in a situation of financial vulnerability, although the exceptional measures adopted by the authorities (ICO guarantee lines, ERTES, moratoriums...) and the expected reactivation of activity have contributed to reduce the number of companies at risk of becoming unviable and the number of companies that will remain viable but struggle to repay their debts out of their expected future earnings (overindebted firms).
The main data and conclusions of the report would be the following:
- The crisis would have significantly raised the liquidity needs of companies in 2020: 70% of Spanish companies would have presented liquidity needs during the crisis, 13 percentage points (pp) more compared to a scenario in which the pandemic had not occurred. The liquidity and capital buffers generated in recent years would have covered, at most, 44% of the shortfall in funds generated by the crisis.
- The measures adopted by national and international authorities eased access to credit under favourable conditions, mitigating short-term liquidity risks substantially. In fact, according to the report, Spanish companies would have covered almost half of their liquidity needs through bank loans with maturities beyond 2020, of which more than 80% would be loans under public guarantee programs.
- Significant increase in the number of companies in a situation of financial vulnerability due to the COVID-19 crisis. Vulnerable companies meaning those with negative net equity or high levels of indebtedness, due to a sharp drop in company turnover, and therefore in their profitability levels:
- The profitability of SMEs would have fallen by 5% on average in 2020, -35% in the most affected sectors. The percentage of companies in losses would have reached 55%, 24pp more than in 2019.
- Although the Bank of Spain's projections for the period 2021-2023 anticipate a progressive decrease in these percentages, in line with the expected reactivation of activity, the report concludes that there will be "an increase of between 2 to 3 pp in the proportion of companies at risk of becoming unviable, due to persistent losses through to 2023, while the proportion of those that will remain viable but struggle to repay their debts out of their expected future earnings (overindebted firms) would rise by between 3 pp and 4.7 pp".
- The Bank of Spain estimates that the amount of unsustainable corporate debt would be between 9 billion euros and 18,6 billion euros, depending on the considered scenario, and most of it would be concentrated in the SME segment.
Filter results
According to Kristalina Georgeva IMF Managing Director, lifting growth requires three things: one, regulatory housecleaning to unleash private enterprise; two, deeper regional integration; and three, preparedness to harness AI.
According to The European House – Ambrosetti, the European Union has an opportunity to boost competitiveness and growth by simplifying regulatory and supervisory frameworks, particularly in the areas of sustainability and the financial sector.
According to Ramón Casilda Béjar, Spain, in today’s complex geopolitical landscape, has the opportunity to strengthen its role as a bridge and connecting country between Ibero-America and the European Union, revitalizing investment flows in both directions.
According to @ECB, in moments of acute stress, the public often turns to physical currency as a reliable store of value and a resilient means of payment, underscoring the crucial role it plays above and beyond everyday transactional convenience
According to Juan S. Mora-Sanguinetti, in Spain a 10% increase in regulatory volume leads to a 0.5% drop in employment in companies with fewer than 10 employees.
According to Hélène Rey “In a world where stablecoins, particularly those pegged to the dollar, become an important global payment tool, we must brace ourselves for substantial consequences”.
@judith_arnal proposes reforms for the EU to advance regulatory simplification, starting with consensus on its meaning, with competitiveness as a pillar, plus coordination mechanisms and a governance rethink.
According to @iee_org, Spain has one of the most demanding tax environments for businesses within the European and international context, which may have significant implications for competitiveness, foreign investment attraction, and business expansion.
According to Christine Lagarde for the euro to gain in status, Europe must take decisive steps by completing the single market, reducing regulatory burdens and building a robust capital markets union.
According to the Bank of Spain, in a context of strong growth in transactions and prices, the conditions under which new mortgage loans are granted currently show no signs of easing in lending standards.
McKinsey notes that European private capital is half the size of the U.S. and must play a key role in boosting competitiveness, by driving innovation, scaling firms, and mobilizing the investment needed to close the gap with other regions.
IMF states that global financial stability risks have grown significantly, driven by tighter financial conditions and heightened trade and geopolitical uncertainty.