In ‘Animal Farm’, George Orwell wrote that “all animals are equal, but some animals are more equal than others”. The latest downturns we have been suffering from seem to reflect the words of the English writer in his satirical fable: while the population suffers the consequences, the banks are finding the goose that lays the golden egg.

The rise in interest rates with which the European Central Bank wants to combat the inflationary spiral has had direct consequences for families, who see their mortgage repayments soar with the rise in the EURIBOR, for businessmen, who find it more difficult to carry out investment projects, and for the State, increasing its risk premium and, therefore, the cost of public debt.

On the other hand, these measures have led to wider profit margins for banks, which have also tightened credit and limited their money supply. A rise in interest rates, which, unlike the interest applied to savings, is immediately passed on in the case of variable-rate loans or mortgages.

According to Bloomberg estimates, the six Spanish banks listed on the Ibex – Santander, BBVA, CaixaBank, Sabadell, Unicaja and Bankinter – will report record profits of almost 20 billion euros by the end of 2022. In other words, the increase in the extraction of income from families and companies has provided unprecedented profits for financial institutions, in a context of crisis where a large part of the population can barely make ends meet.

Repeating the same pattern, expecting different results

For its part, the banking sector rejects that this is an extraordinary situation, arguing that the increase in interest rates has simply brought monetary policy back to normal. It argues that for years, because of interest rates at historic lows, where they had low margins, it was very difficult for them to generate income. Claims that seem to contradict the also historically record profits in 2021.

Bearing in mind the role that banks have played in the financial crises we have suffered, whether in financing speculative bubbles, accumulating the risk generated by their own speculation, or turning off the tap of financing to businesses and consumers who later had to pay for their rescue, the arrogance and indifference of this sector towards the suffering of the population that sustains its business model is surprising.

Perhaps this combination of incompetence, corruption and arrogance should serve to curb crony capitalism between political and financial power from the core. The social and economic improvements needed to achieve a fairer society are incompatible with a financial system designed to serve the elites, and which feeds back by maintaining the favouritism of political power.

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