Palma.A report by the Bank of Spain shows that in the first quarter of the year, the amount that people have put into banks has dropped alarmingly.
The Bank of Spain report released yesterday covering the first three months of this year, provides evidence that people have been taking out a great deal more money from banks in the Balearics than they have been putting in. The findings merely confirm a trend set in the final quarter of 2011 when it was beginning to become clear there were fewer and fewer deposits. In fact the joint sum for deposits made in banks in the Balearics for both the final quarter of 2011 and the first of 2012 amounts to just 2'832 million euros.
The Bank of Spain said the lack of confidence by investors is affecting the country's financial system.
The news comes despite the European Union bailout funds which will be determined this week once it has been calculated what amounts banks need to recapitalise.
Financial analysts and the Balearic Business Association CAEB have explained that uncertainty about the future of Spain's financial system is prompting investors to direct their capital towards countries who have a safer monetary system.
Poor investment
The Balearics is one of the regions of Spain most affected by poor investor confidence, possibly because much of its economy has an overseas base.
But in most other regions except Madrid and Galicia the tendency of plummeting deposits and alarming levels of withdrawal is the same.
Another factor worrying banks is a growing tendency of failure to honour debt repayment which in some instances is over 10 percent and similarly the rise in the number of loans that have been completely repaid without others being taken out.
The income from the European Union is now crucial to enable banks to give lines of credit, analysts said.
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