President.- Thank you very much and good afternoon. I am here to announce the measures that the Government has decided to implement after yesterday's and today's meetings of the Ministers of the European Council of Economic and Financial Affairs, also known as Ecofin.
As a result of the events originated in the United States more than one year ago, which have influenced the international financial situation, Europe has been going through great difficulties and this has caused bankruptcies, nationalisations and a need for capital in the case of certain financial institutions.
The Government of Spain has been working with its European partners and with the Commission in order to implement coordinated actions and ensure the stability of the European financial system. Hence our positions today at the Ecofin meeting, which our Vice President and Minister of Economy has defended. We have done this because we think that the best way to handle a problem that affects us all is the establishment of a common position within the European Union; and we have also done it this way because it was not as urgent for Spain as it was for other countries.
The Spanish financial system, the Spanish Banks and Savings Banks, in spite of the current, highly complex context, have proved to be solvent and solid. This is the result of the professional, prudent, efficient behaviour implemented under the auspices, under the supervision and with the support of the Bank of Spain.
Now, once the Ecofin meeting is over and following the suggestions that have already been accepted by it, the Government has decided to strengthen the Spanish deposit guarantee system, by providing greater protection to the current deposits in Spanish Banks and Saving Banks, reaching one hundred and thousand Euros per account holder and entity. This measure is intended to enhance confidence in our financial entities and, thus, both citizens and companies can be one hundred per cent sure that their savings are guaranteed and secure.
Besides, in such an unusual moment, our Government must assume its duties with regards to our country, with regards to our companies and with regards to our citizens. I would like to do this by implementing extraordinary measures, measures that may serve to face the challenges we must overcome.
All the European economies are suffering the consequences of the bad results in the interbank credit markets, which prevents financial entities from obtaining resources, causing important credit restrictions that affect both companies and families. This phenomenon affects our economy in a particular way, given the financing needs derived from the increase of economic activity in our country over the last few years.
Thus, given these credit restrictions, it is essential for the Government to contribute to the financing of companies and citizens by helping Spanish financial entities. Credits make an economy go on. Without credits there are no investments and without investments there is no economic activity and, therefore, without this there will not be growth or employment creation in the future.
Thus, the Government has made a second broad-scope decision: we will create a fund, covered by the Treasury, in order to contribute to the financing of our financial system, and it will be endowed with thirty thousand million Euros, which might be expanded to fifty thousand million Euros, maximum. This fund will purchase Spanish maximum-quality assets from different financial entities - although this will be voluntary for them and it will follow the market criteria - in order to guarantee financing for companies and citizens through them and in the long term, and this will serve to keep up our economic activity and our employment levels.
This fund will be run according to the following principles: the fund will only purchase maximum-quality assets at a price or remuneration that will match the risk levels. This will serve to attain two aims: in the first place, it will minimize the costs for public resources and, in the second place, it will serve to avoid the provision of subsidies for credit entities.
Our main aim is to boost up the good performance of Spanish credit markets through good, prudent practices; mitigating the danger of a wrong credit rationing. It will be a strictly provisional measure, for it will be in force just until markets have gone back to their normal situation, and the different operations will have to be carried out according to the best regular market practices in order to propitiate their recovery.
The fund will be completely compatible with the standing European internal market norms, providing the same level of support to all resident entities in Spain, only that the assets refinanced will have to be Spanish.
It will be naturally cancelled when markets go back to normal, and its intensity will be progressively adapted through the conditions offered to the financial entities.
Unlike those measures implemented by other countries, this one is not intended to rescue or "cleanse" our financial system; instead, it is intended to prevent possible risks and to support productive activity and credits so that both companies and citizens can keep receiving financing. Thus, this initiative is intended to help citizens and companies, it is intended to support economy and employment.
The Treasury will not buy toxic assets, only strong ones. We are not going to solve solvency problems that, luckily enough, we are not facing, as has been proved after the last few weeks. Thus, we are going to boost up financing in order to make up for companies and citizens' needs until the moment in which markets can go back to normal.
This way, we will strengthen the confidence of citizens in our financial system and we will also offer them support; we will prove our engagement and we will keep up our economic activity. This confidence must be endorsed by financial entities, which will benefit from certain advantages from now on, and this will enhance the normal development of credit relationships in the case of citizens and companies.
We can implement this initiative without problems given our comparatively low debt levels, thanks to the efforts implemented in order to reduce over the last few years; and, as you all know, our debt levels are twenty points beneath the European average.
During the next few days, the Council of Ministers will enforce the new measures by making the corresponding decisions. Besides, the Government will send the contents of such measures to the European Commission for analysis.
I informed the leader of the opposition about this decision a while ago and I will soon hold a meeting with the social agents in order to provide them with further details about its scope. Besides, the Vice President and Minister of Economy will inform the representatives of financial entities about it tomorrow. And from tomorrow on he will inform the PP, the representatives of the PP, about the technical details of the decisions I have just announced.
The Government has been implementing the measures it has deemed fit in order to face the ever-changing evolution of the international and Spanish economic situation. Now we do it again in order to increase citizens' confidence, in order to boost up the stability of our financial system, in order to enhance our production and in order to preserve and increase the employment rates. This is the compromise that will keep on characterising the attitude and the actions of the Government in the future; and I hope we will have the cooperation of the other political parties, of the unions and businessmen organisations and, of course, of the financial system.
Journalist.- In the first place, I would like to know what kind of assets are you going to accept and whether or not these can be newly issued shares.
I would also like to know whether it is your intention to use that fund to make up for the dependency of Spanish entities on the financing offered by the European Central Bank; and whether you have already decided for how long that fund is going to be operative.
President.- In the first place, these assets are going to be high-quality assets. Of course, the technical characteristics will be contemplated in the decisions made by the Council of Ministers and they will be explained by the Vice President.
In the second place, this activity is complementary to the activity carried out by the European Central Bank; it is complementary because both activities are developed at two different levels. The European Central Bank pays attention to liquidity but this measure is intended to strengthen the financing of the economic system as a whole; of course, respecting the task carried out by the European Central Bank.
The Government's assessment, reflection and decision-making process has been characterised by our attempt to make our best in order to keep up with the pace of the European Commission and of the European Union. No decision has been made by my Government before a common line of action was established by Ecofin and it has been this common line of action that has made it possible for us to make the decision I have just announced and we have therefore worked in harmony with the European institutions at all times.
Journalist- Why haven't you implemented a one hundred per cent guarantee, just as Germany or Ireland? For, this way, you would have protected not only families, but also those companies that can change their deposits from one financial entity to the other?
A second question, will foreign banks residing in our country be allowed to sell their assets to the Treasury?
President.- They will, I have just explained it. That, as far as the second question is concerned.
Now, as to the first question, I'll refer to our main line of action once more: we are convinced that it is highly convenient to keep up with the pace of the European Union, for the European Union should move at a joint, coordinated pace.
Today, Ecofin said in its conclusions that: "we take it that the minimum amount per deposit totals to fifty thousand Euros, yet, some countries are talking about one hundred and thousand Euros; thus, the Commission will make a proposal to homogenize these amounts definitively, in due time". We took it that it was reasonable to increase the parameter established by Ecofin and propose the maximum amount discussed today during the European debate: one hundred and thousand Euros. That is the reason for this.
Still, as I said before - and I will say it again -, if there is a financial system with proved, guaranteed solvency and if there is a safe place for Spanish citizens and companies working in Spain to keep their savings, it is the Spanish financial system.
Journalist- Who is going to buttress this increase of guaranties? Are the very financial entities going to do this through the current contribution system or is this going to be modified? Are the Government or the Bank of Spain going to provide extraordinary aids?
Then, how is this fund going to be organised from the legal point of view? Perhaps there is a Royal Decree including a set of urgent measures. Why would it…?
President.- Those decisions will be made next Friday during the Council of Ministers. It is there where the different positions concerning the characteristics of the fund, its requisites and everything I have just said will be dealt with.
As you all can surely see, since the leader of the opposition has been informed about it, and he has had a receptive attitude towards this idea, we are going to take our time in order to go through the different specific aspects of this question with the People's Party. We are also going to set up a dialogue with the financial entities and next Friday we will go through this in detail, for, as you can imagine, the Ministry of Economy has foreseen all these possibilities.
But I think it is better to deal with this in the first place with the different political parties, especially with the People's Party.
Journalist- I would like to ask, once more, something about the increase of the Guarantee Fund. Will it be necessary to increase it? Who is going to contribute to it?
Then, you said that the Minister of Economy is going to inform the banking entities about the measures taken so far. I would like to know whether or not you informed them about this measure yesterday, during your meeting. If so, what did they say about it?
President.- We were commenting on the different possibilities. As the meeting was held yesterday and the Ecofin meeting is over, I can now say that this was one of the possibilities contemplated, yet, nothing was set in this regard. I think that they were reasonably receptive with regards to this initiative.
Journalist- Mr. President, you talked with the main bank Presidents yesterday, what did you talk about, considering that the vice President is going to inform them about something else tomorrow?
I would also like to ask you what are you and the social agents going to talk about this afternoon here.
And you said that you had spoken to Mariano Rajoy on the phone. Have you established a date for your next meeting?
President.- The representatives of the main financial entities and I were analysing the situation. I asked them their opinion about the situation. The meeting was highly productive. The Government's analysis coincided with the analysis made by the financial entities and also the measures proposed in order to enhance the financing of the whole system and, therefore, to enhance the financing system for credits.
Then, I had a conversation with Mariano Rajoy a few minutes ago. I informed him about the two measures I was going to announce here and we agreed that it was convenient for the Vice President and the Economic Team of the Government to give the specific details and technical aspects during the meeting with the economic representatives of the People's Party next Thursday. We also exchanged our opinions concerning the assets and some other questions; but I think that, since we are going to hold that meeting, we should wait and see and next Friday the fund will be approved off taking into account the different possibilities and details put forward today.
Journalist- As to the thirty thousand millions the financial entities will be provided with, and which might be increased to fifty thousand, I would like to know what measures you are going to implement in order to control it and guarantee that citizens benefit from this from the point of view of credit. Have you already come up with a method to make sure that this will benefit citizens and not only the financial entities?
As to politics, this morning we heard you talk about a consensus among political, social and economic agents in order to try to overcome this crisis. I would like to know whether you have already asked the representatives of your own party to try to spread an atmosphere of appeasement before the meeting with Mariano Rajoy, for it seems that you are going to start up a war, rather than a dialogue.
President.- I have always considered that political debates should take place in an adequate atmosphere. I think that it is the People's Party that should be asked to behave accordingly in the first place; and the Socialist Party too. I mention the PP in the first place because last week several representatives of the PP criticised and attacked the Government. Therefore, I think that the debate should be a calm one, mainly because we are trying to work together or share our views.
As to the second question, one thing is obvious: financial entities are credit entities by default. Making loans forms part of the logics of their activity and of their system to raise benefit. This is what financial entities are about, and this takes place under adequate conditions and when they can access credit. For, the current situation is what has caused this clear credit restriction.
This fund is aimed at helping financial entities, enhancing and recovering their lost credit activities. I understand that they are going to cooperate. We are going to coordinate our actions and I am completely sure that it is financial entities that are more interested in providing credit; yet, they must work under the adequate conditions.
Let's say that this is the system and the model, there is no other alternative model because the public sector does not have a banking system. It is the private sector that has a banking system, of course. It is the private sector that should assess the risks and give the credits. Of course, we are not going to change the model, because the model works and has always worked, except under these unusual conditions, for the possibilities to obtain a credit have almost disappeared due to the crisis of the financial system.
Still, I would like to point out the fact that this fund, regardless of the amounts used, will be covered by the Treasury, but it will be recovered by the State, by the public sector, of course, because it is simply intended to purchase assets that form part of its own balance and it will be recovered when circumstances allow for it. To put it bluntly, this is a great provisional loan and we can make it - I insist - because we have a reasonable debt level.
As you all know, this fund, this thirty thousand million Euros initiative - which can be increased to fifty thousand million Euros - will not be charged to the deficit, but to the debt.
Journalist- Mr. President, I would like to know whether you are concerned about the fact that these measures might cause alarm instead of bringing about the tranquillity they seem to be aimed at - for you are repeating once and again that the Spanish financial system is so solid - and make citizens worry about the safety of their savings.
President.- It should have the opposite effect. Luckily enough, the Government has not had to rescue any financial entity so far. The only thing the Government can do in this favourable though difficult situation, in comparative terms, is providing the financial entities with financing so that they may grant credits, because our main concern is our economic activity.
As the different economic agents know, our main worry as far as the economic activity is concerned is the lack of credit. We think that we can help in this sense and, besides, we think that we can do it taking into account the principles of logic, the main lines of action and the working style of a country that belongs to the European Union and that belongs to the Eurozone.
We don't need to insist on the solvency of our financial system. Facts are, as usual, stronger than words. We have seen how highly powerful banks have fallen into bankruptcy in the richest countries: the United States, the United Kingdom, Germany... Several banks, while our system has withstood perfectly well.
Therefore, it is not a matter of words, be it the words of the Governor of the Bank of Spain, who spoke so emphatically this morning, or the words of the President of the Government; no, it is a matter of facts. And the reason for this is, as I have said before, that no system is more demanding than the regulatory, supervision and management system implemented by the Bank of Spain over so many years, a system that even during periods of great benefits has demanded the different financial entities to provide guarantees.
I will say this: yesterday, our financial entities admitted that it was thanks to such a rigorous control system, to the system implemented by the Bank of Spain and our legislation, that we are now in this situation, a situation that is better than the situation in most countries, as has been proved by facts; still, it is a difficult situation too, mainly due to the fact that the different financial entities all over the world cannot resort to credit anymore.
Thank you very much.