The Bank of Spain does not foresee a "liquidity problem" for banks despite the tariff shock.

MadridAlthough banks have led the stock market crash After Donald Trump announced the new tariffs, the Bank of Spain does not foresee a liquidity problem in the Spanish or European financial sector. "The liquidity ratio [of the financial sector] is at maximum levels," recalled Mercedes Olano, Director General of Supervision of the Bank of Spain, during the presentation of the 2024 supervisory report on Tuesday. "We do not foresee a liquidity problem [in the sector] in the short or medium term," she added. The words of the head of supervision of financial institutions provide some relief after the stock markets, including the Ibex 35, have experienced dark days due to the impact that the trade war may have on the economy.

In any case, the Bank of Spain recognizes that the situation is one of "maximum" uncertainty, which is why surveillance of the financial sector is "maximum," both by the Bank of Spain and the European Central Bank. The supervisory body explains that it is conducting "continuous" monitoring of the potential impact of the tariffs on the financial system. In any case, the bank points out that, for now, there are no tariffs on financial services, and therefore, the consequences would be indirect: "The tariffs affect bank customers, so that would be the impact on the entities," Olano noted during a briefing. The Bank of Spain has not yet quantified what the specific impact might be.

Geopolitical risks

For some time now, the Bank of Spain has been asking the financial sector to take geopolitical risks into account when detecting what could negatively impact its health, that is, its credit portfolio. This factor is added to that of climate change and cybersecurity. In any case, in 2025, and in the midst of a trade war, geopolitical risks will be a priority element in the oversight of the banking sector, as explained by the director of supervision at the Bank of Spain.

The supervisory body, therefore, is once again focusing on this issue: "We have been asking [banks] for some time to include it permanently and, if not, to calculate it temporarily and then include it structurally," said Olano. These geopolitical risks are posed by the banking entities themselves depending on their activity, especially outside Spain, and the Bank of Spain subsequently analyzes them, even in stress situations, to see whether the bank would withstand the shock or not.

Regarding whether banks already include provisions to cover the risks that may arise from Donald Trump's tariff policy, Olano has ruled out this because it is a recent situation and has indicated that in the 2024 results, "significant increases in credit provisions" were not recorded either.