Pablo Hernández de Cos: The challenges to the banking sector a year after the outbreak of the COVID-19 pandemic

Opening remarks by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the 1st "Observatorio de las Finanzas" Symposium, organized by El Español/Invertia, 22 March 2021.

Central bank speech  | 
26 March 2021

Good evening ladies and gentlemen.

I should like to thank the organisers of this 1st "Observatorio de las Finanzas" Symposium staged by El Español/Invertia for inviting me to deliver this opening address. This forum has proven timely; the challenges posed by the pandemic make it particularly important for the main financial institutions and the regulatory and supervisory authorities to pool their views on the situation of the Spanish financial system.

To contribute to this debate, I shall analyse today what the banking sector's pre-crisis starting point was, the impact of the crisis over this first year, the current situation and the challenges ahead.

The starting point: a more resilient banking sector

As we know, the COVID-19 pandemic strongly impacted Spanish economic activity in 2020. GDP underwent a year-on-year decline of 11% last year, marking an unprecedented peacetime contraction. This decline has been appreciably steeper than that of other, comparable euro area economies. This relatively worse performance has been due, at least in part, to structural factors, such as the greater weight in our economy of the services sector. The adverse impact has been particularly severe in some sectors of the economy (hospitality, retail and wholesale trade, transport, etc.) and in specific population groups (in particular among the lesser skilled and young adults).