Spain reinforces banking union worries 16 Apr 2013 Retail clients of the worst Spanish banks were sold hybrid debt that was later haircut. Madrid is counting on healthier lenders to bail them out through its deposit guarantee fund. The ECB is crying foul. No wonder Germany is wary of a pan-European deposit protection scheme.
Europe has unconditional bond-buyer at last: Japan 11 Apr 2013 The Bank of Japan’s money printing machine is forcing down risky government bond yields 6,000 miles away. The hope of Japanese money is helping euro zone bond markets shake off a swathe of bad news. European governments shouldn’t take gentle markets for granted.
ECB faces high-stakes dilemma on SME loan drought 12 Mar 2013 The European Central Bank can’t ignore the dearth of credit for small Spanish and Italian companies: it’s in its own data. Taking credit risk via buying banks’ SME loans would be way out of Mario Draghi’s comfort zone. But if things worsen the ECB may have to take the plunge.
How to get richer than Warren Buffett, Zara-style 5 Mar 2013 Inditex founder Amancio Ortega successfully flouted many of the rules of fashion retail. The company behind Zara has now made him one of the world’s richest men. The shares look painfully expensive. But the Spanish group’s unusual approach brings durable competitive advantages.
Hugo Dixon: Spain probably won’t catch Italian flu 4 Mar 2013 The risk of Madrid being thrown off its reform path has risen since Italy’s shock election. But Mariano Rajoy doesn’t have to face the voters for nearly three years. What’s more, the Italian vote may even have a silver lining for Spain if it leads to less austerity across Europe.
Markets’ euro-jitters unjustified but helpful 5 Feb 2013 After a strong rally, a correction is almost inevitable, and potential bad news always lurks in Europe. But with the ECB calling the shots, political turbulence in Spain and Italy isn’t a big risk. Still, weak markets put welcome pressure on politicians to keep moving forward.
Real Madrid’s money-league triumph has rotten base 25 Jan 2013 Soccer’s revenue league shows this is the decade of the $1-billion-a-year club. Leader Real Madrid could break that barrier by 2016, at current growth rates. But unequal TV deals play a big part in the team’s triumph. The loser is Spanish football - both on and off the pitch.
Markets behave too well to fix Spain 8 Jan 2013 Investors have made an official rescue less likely. Madrid’s bond yields are the lowest since March, and probably wouldn’t fall much more if Spain asked the ECB for help. Madrid and Berlin may like the new status quo, but the Spanish economy would benefit from unleashing the ECB.
Spain’s exit plan for duff banks better than UK’s 20 Dec 2012 Madrid has just put 1.9 bln euros more into its lenders. The economy is still shaky, and foreign interest in the state’s bad bank isn’t the confidence boost it seems. But setting a fixed deadline to sell its new stakes is preferable to the UK’s flaky policy on RBS and Lloyds.
EADS’ governance rejig falls short of true reform 6 Dec 2012 Paris and Berlin will reduce their influence over the aerospace group. Private shareholders Lagardere and Daimler will be free to divest their stakes. But EADS is still a long way from the kind of reform that would prevent unwarranted government meddling in its operations.
Spain’s bank rescue is part bail-in, part bail-out 29 Nov 2012 Madrid has lopped 10 bln euros off its bank rescue tab by cutting the value of its worst lenders’ hybrid debt. Ireland’s 2011 haircuts were steeper. Politics means Spain had to balance burden-sharing with ways to soften the blow for the retail punters who must share the pain.
Catalonian independence isn’t worth the pain 23 Nov 2012 Spain’s richest region’s parliamentary elections will determine whether it goes ahead with a referendum on independence from Madrid. Beyond the political rhetoric, the cost of a breakup from Spain and the EU would far outweigh its elusive benefits. Sobering up would be painful.
ACS shows who’s the boss at Hochtief 19 Nov 2012 The Spanish group is purging the top management of Hochtief 18 months after gaining control of the German builder. What makes sense for struggling ACS could endanger its subsidiary’s future. Investors should learn to mistrust promises made in the heat of takeover battles.
Hugo Dixon: Is Hollande more like Rajoy or Monti? 19 Nov 2012 In other words, is France’s president condemned to be always behind the curve with reform like Spain’s PM? Or can he get ahead of it like Italy’s PM? Hollande started off like Rajoy. But he is finally talking sense. What’s not clear is if he has the courage to keep it up.
Eviction halt will end up helping Spain’s banks 13 Nov 2012 Spanish lenders have agreed to a two-year freeze on kicking desperate mortgage debtors out of their homes. That’s costly in banking logic. But in a crisis where government aid is crucial, goodwill counts. Besides, shuffling residences won’t add much to total mortgage payments.
AT&T is all dressed up with nowhere to go 12 Nov 2012 The telecom company had a $93 bln bid for Telefonica blocked by Madrid, according to a Spanish newspaper. The target has denied the story. But it’s a sign of the problem AT&T faces: a lofty stock multiple makes M&A tempting, but it seems shut out of both domestic and foreign deals.
ECB ratings brouhaha absurd but not funny 7 Nov 2012 Spain’s central bank has been criticised for allowing Spanish banks to borrow on loose terms. This was due to the flawed interpretation of complex collateral rules instead of a deliberate ploy to bend them. The uproar was ridiculous, but lessons can be learned.
Can Spain, Italy keep their bailouts on the shelf? 31 Oct 2012 The mere threat of ECB bond buying has lowered yields for Spain and Italy. Markets are still under the spell and investors are scared to sell. Rome won’t burn if it declines a bailout, but Madrid should bite the bullet.
Spain needs to do more to tempt bad bank investors 30 Oct 2012 Stinky property assets will be transferred to a new state-backed Spanish bad bank at around half their par value. Madrid hasn’t yet found the private investors it needs to keep the entity off the state’s books. The discount may not be enough to lure them.
Santander’s fortification phase is far from done 25 Oct 2012 The Spanish bank turned a profit in the third quarter despite taking big provisions - ordered by the state - against the splintering economy. But Santander looks weak compared to global peers under new Basel III capital rules. If anything, closing this gap is getting harder.