A group of experts in banking research from the School of Economics of the University of Navarra and the International Monetary Fund (IMF) will come next July 3 to Strasbourg to present in the European Parliament a study that analyzes the recapitalizations of banks with public money in the period from January 2004 to December 2012 in 24 countries.

A topic of social interest both for the total amount of public money allocated to clean up the global financial sector and for the role played by the financial institutions themselves in the crisis uncovered in 2008. The event will be moderated by MEP Pablo Zalba, Vice-Chairman of the Committee on Economic and Monetary Affairs.

The research is unique for the breadth of the study period and for the database it has generated, as it includes information from countries such as the USA, UK, Ireland, Spain, France, Germany and Belgium, among others.

The study compares the characteristics of each individual bank (size, deposits, efficiency at management, capital, short term funding deadline...) with the cost of public money involved in their reorganization. Bailouts of more internationalized and better managed banks were less common, and when they did occur, they were less burdensome for the public purse. In contrast, the more local banks with a higher proportion of less stable funding required more and more expensive bailouts.

Imbalance due to low interest rates

The work shows that the low interest rates in the Eurozone during the pre-crisis years generated an imbalance in the Southern European countries, as they had lower rates than would have been optimal for them, which contributed to increase risk appetite in these countries and to trigger the growth of the credit at Economics.

It also compares the cost of bailouts in each country in relation to their Gross Domestic Product, with Ireland and the UK leading the ranking as having incurred the highest relative costs. The U.S. and the U.K. have devoted the largest total amount of money to cleaning up their banking sectors, and the Royal Bank of Scotland was the bank that received the highest amount of money: 76 billion dollars between 2008 and 2009.

The study, coordinated by Reyes Calderón, dean of the School of Economics, will be presented by the Commissioner for the Internal Market, Michel Barnier. This will be followed by an explanation by four co-authors of the text: Antonio Moreno and Germán López-Espinosa, from the University of Navarra; Antonio Rubia, from the University of Alicante; and Laura Valderrama, an economist at the IMF. Peter Spiegel, from the Financial Times, will also speak. To conclude the presentation, representatives of financial institutions such as Santander, BBVA, HSBC and BNP will participate in a roundtable.