Spanish banks still face a long sticky summer 22 Jun 2012 Two independent consultancies have identified a capital hole of up to 62 bln euros. That’s at the lower end of market fears. And though the hurdle looks low, the stress test assumptions are harsh. But the results are not final. The actual bill won’t become clear until September.
Spain won’t be saved without grand master plan 19 Jun 2012 Avoiding the great Greek scare hasn’t given the euro zone any relief on Spain, whose yields remain at record highs. Madrid has virtually done all it can. Now euro leaders must come up with a credible and long-term plan at their summit next week. Obviously they’re not there yet.
Spain: not that uncompetitive 18 Jun 2012 It’s easy to be pessimistic about Spain, but there are also reasons for hope: the economy is adjusting and exporters are holding up. The bailout will only intensify the painful adjustments, but in the end, Spain should be better off for the suffering.
Why it’s hard to shut down a Spanish bank 15 Jun 2012 EU Commissioner Joaquin Almunia said this week that it could make sense to liquidate a bank if the costs of keeping it alive with public money exceed the costs of closing it down. That sounds sensible. But in Spain, it’s not that simple.
Spain still stuck in downward spiral 11 Jun 2012 Enthusiasm for the country’s bailout-lite is fading fast. Madrid’s economic woes still loom large, while euro zone support could make Spanish bonds even less appealing. The country’s recapitalised banks may prop up the state for a while. But Europe hasn’t stopped the contagion.
Spain, euro zone could still clash over banks 11 Jun 2012 The country’s bank bailout must come with strict conditions attached in order for the money not to be wasted. EU authorities will want to take charge in order to end decades of cronyism. Madrid may rebel on sovereignty grounds. But there’s little it can do to avoid the takeover.
Spain still vulnerable post mega bank bailout 10 Jun 2012 Madrid has finally got a credible plan for its lenders: it will receive up to 100 billion euros from its euro partners. But the state’s debt will rise as a result and the economy is still shrinking. It may yet require a full bailout. That would really test the single currency.
Euro bank rescue doesn’t have to shame Spain 8 Jun 2012 Madrid may be heading towards a recapitalisation of Spanish banks that would be funded by the euro zone’s bailout fund. This would be welcome, after too much wasted time. For now the quantum doesn’t really matter. The important thing is for the EFSF to get in.
Spain underwhelms with new central bank chief 8 Jun 2012 The government has gone for central bank veteran Luis Maria Linde, a relative unknown who is too old to even finish the mandate. As the Bank of Spain badly needs to repair its battered reputation, former ECB board member Jose Gonzalez-Paramo would have been just the ticket.
Spain’s message keeps getting lost in translation 6 Jun 2012 With multiple government officials speaking at once, it’s hard to know exactly what Spain is thinking. Having one authoritative voice would help. One thing seems clear: it is not asking for a bailout. Still, some outside help might be inevitable for the banks.
Hugo Dixon: ECB and euro governments play chicken 4 Jun 2012 There isn’t just brinkmanship between the zone’s core and its periphery; there’s also a standoff between the central bank and the governments over who should rescue the single currency. In such games somebody usually blinks. But if nobody does, the consequences will be terrible.
Why Spain is under siege 1 Jun 2012 Spanish elites seem to be shocked that the country has been pushed to the brink. But laying the blame on ignorant investors, evil foreign media and the euro zone’s political paralysis won’t help. And the lack of credibility of successive governments has been a real problem.
Telefonica still behind the curve 31 May 2012 The Spanish telecom company wants to spin off its German, and possibly Latin American, units to reduce debts. It will also pay part of its dividend in shares. But it’s not the best time to sell assets and the move will raise the company’s exposure to its troubled home market.
Spain will regret refusing front-door bailout 30 May 2012 Instead, Madrid has begged for all sorts of back-door support: bond-buying by the ECB, direct recaps for its banks, a quasi-ECB rescue for banks. Germany and the ECB aren’t likely to allow these unless Greece blows. But, at that point, Spain will be in a terrible crisis.
Euro banks rescued with fudge, not cash 28 May 2012 First, Ireland’s banks got promissory notes. Now Greek banks and maybe Spain’s Bankia will get bonds. The bonds are then pledged with the central banking system for cash. That allows governments to avoid raising money from investors. But it’s not a comfortable long-term solution.
Why can’t EU banks haircut bondholders? 28 May 2012 Senior creditors were let off the hook in the last crisis. Now, with bank capital just as shaky and states even more cash-strapped, forcing losses on unsecured debt seems a no-brainer. But by the time Europe perfects its bail-in rules, there may not be enough bonds to haircut.
Bankia’s whopping bailout is double-edged sword 26 May 2012 The Spanish lender’s capital hole is a higher-than-expected 19 bln euros. Government support will shore up one of the country’s systemic institutions. But the scale of the cleanup implies other banks also need more cash. It is unlikely that Madrid can fill the gap alone.
Direct bank recaps won’t give Spain quick fix 21 May 2012 Putting euro zone cash directly into Spanish lenders, bypassing the state, may seem a magic solution to one of the euro zone’s knottiest problems. But political and technical hurdles first need climbing. Madrid may need a more conventional bailout for its banks.
Botched bailout rebounds on Bankia 17 May 2012 Both Spain’s government and the newly-nationalised bank’s chairman deny depositors are fleeing. Yet the latest share price plunge inflicts further pain on clients who participated in the lender’s IPO last summer. That makes it harder for the government to restore confidence.
Spain’s taxpayers main losers from Bankia bailout 15 May 2012 Following last week’s rescue, the state is the biggest shareholder in the country’s biggest property lender. Retail shareholders who bought in last year’s IPO also face further dilution. The beneficiaries are Bankia’s creditors - and Spain’s other big lenders.