The Bank of Spain and the government are in talks with banks over the treatment of their deferred tax assets, said Luis Maria Linde, the governor of the regulator.
“It is an important issue that is now being discussed,” Linde told reporters after making a speech in Madrid today. He said there was no reason to think different consideration of such assets would add to the government’s debt burden.
Spanish banks have been pushing for a different treatment of deferred tax assets, which were built up by lenders during the country’s financial crisis and must be deducted over time from capital ratios calculated according to the criteria of Basel III regulations. Spain’s banking system had 58 billion euros ($75 billion) of tax assets in April, according to Bank of Spain data. Linde said he didn’t want Spanish banks to be penalized under Basel III rules.
“‘It’s potentially a big issue for the Spanish banks,” John Raymond, an analyst at CreditSights Inc. in London, said in a phone interview. “To the extent that they can get some of these DTAs reclassified, then the deductions from capital can be lower in the future.”