Spain suffers net capital outflows during Cyprus crisis

For the first time since last August, Spain suffered a net outflow of capital in the month of March during the Cyprus bailout crisis, during which the idea of depositors being forced to foot part of the bill for the bank rescue was floated before being withdrawn.

According to balance-of-payment figures for the month released Friday by the Bank of Spain, net outflows in financial operations by residents amounted to 5.168 billion euros, compared with 67.46 billion a year earlier when fears were mounting that Spain could require a full bailout. European Central Bank President Mario Draghi helped stem that trend by announcing a program of sovereign bond purchases in the secondary market.

Foreign investors in March withdrew 14.1 billion euros, mainly in stocks but also in bonds, the most since June of last year.

Despite the March reversal, Spain saw net inflows of capital in the first quarter 36.024 billion as the threat of ECB intervention renewed investors’ appetite for higher-yielding sovereign debt. In the first quarter of last year, outflows totaled 97.654 billion euros.

Spain posted a current account surplus in March of 1.39 billion euros as a result among other things of a merchandise trade surplus and an improvement in the service balance as tourism remained buoyant. The country posted a current account deficit of 3.231 billion in March of last year.