Spain central bank head shrugs off impact of LatAm woes on banks
Bank of Spain governor Luis Maria Linde said Wednesday he saw no "serious impact" from Latin America's economic troubles on European banks.
Speaking in Madrid after a meeting of euro area and Latin American central bankers, he said that the situation in Brazil, which is heading to its worst recession since the 1930s, was “a worry for all”.
“Having said that we don’t think the situation is having a big impact, or a serious impact. This is not a particular worry for the time being,” he added.
Spain’s two largest banks by market value, Santander and BBVA, relied on their businesses in emerging economies in Latin America to help them navigate the country’s five-year slump before growth returned in 2014.
That shield is becoming a burden as Brazil’s economy, Latin America’s largest, shrinks, commodities prices collapse and currencies weaken from Colombia to Chile.
Santander generates about a fifth of profit from commodities-rich Brazil, which is being rocked by a political crisis sparked by a sweeping graft scandal at the state-run oil company Petrobras and a slump in demand from China.
The rest of the continent is also facing economic challenges.
Chile and Peru, which are among the biggest producers of copper and zinc, have seen export revenue tumble as prices for the metals have fallen while Argentina is battling with hold-out creditors following last year’s default and Mexico struggles to revive growth.