Spanish Bank Debt With ECB Up 15.7% in April; Surprise VAT Hike Coming Up; Moody’s Downgrades 16 banks; Capital Flight at Bankia; Scramble for Deposits Leads to System Wide CannibalizationCourtesy of Google translate, please consider the following bleak reports from Spain.
NEW YORK (Reuters) – Moody’s Investor Service carried out a sweeping downgrade of 16 Spanish banks on Thursday, including Banco Santander, the euro zone’s largest bank, citing a weak economy and the government’s reduced ability to support troubled lenders.
Spanish Bank Debt With ECB Up 15.7% in AprilEl Confidencial reports The Spanish bank debt with the ECB increased by 15.7% in AprilThe debt of Spanish banks with the ECB shot up to 263.535 billion euros in April, that is 15.7% compared to 227.6 billion recorded in March, a new record, according to the Bank of Spain.
US banks increased sales ofprotection against credit losses to holders of Greek,Portuguese, Irish, Spanish and Italian debt in the last quarterof 2011 as the European debt crisis escalated.
The ECB said it willtemporarily stop lending to some Greek banks to limit its riskas President Mario Draghi signaled the central bank won’tcompromise on key principles to keep Greece in the euro area.
The net financing granted in April by the Eurosystem to Spanish banks accounted for 68.8% of total Eurozone, which amounted to 382.712 billion euros.
Dexia SA (DEXB) failed in October when the bankfaced 47 billion euros of such margin calls on interest rateswaps it sold.
However, the gross amount of appeal does not collect the money that Spanish banks have borrowed from the ECB and have been redeposited in the body to receive a return of 0.25% a day.
MADRID (AP) — Confidence in Spain’s banks and its teetering economy was shaken Thursday after a newspaper reported that depositors were rushing to withdraw their money from Bankia, a troubled bank that was effectively nationalized just one week ago.
The increasing difficulties of Spanish institutions to borrow from the interbank appreciate finding that the credit requested by Spanish banks headed by Mario Draghi school increased sixfold compared to that recorded in April 2011 (42.227 billion).
Ifyou sell on 90 day (credit) terms you need working capital,”said Garcia Legaz, an official just below ministerial rank.. Spanish banks are undergoing a wave of mergers in an attemptto build up their strength. The number of lenders is expected toshrink to 10 from around 40 before the crisis as the governmentforces them through various rounds of cleaning up of toxic realestate assets.. “Spanish banks are very reluctant to renew credit lines.
El Economista reports The Government is preparing a surprise rise in VAT for up to three points by 2013Mariano Rajoy’s government is determined to adhere strictly and without delay the requirements of Brussels to get the unequivocal support of the European Union to reform measures taken and to try to appease the markets.
So, on Monday, the minister Luis de Guindos, acceded to the wishes of Merkel and European Commission to be the European Central Bank (ECB) who audit the Spanish banks.
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
And now, the chief of government has already committed to some partners of his confidence that the government might have to climb two or three points in the VAT, by surprise, without waiting for 2013, as planned.
Specifically, Rajoy met last weekend privately with the president of the CEOE, Juan Rosell.
A meeting that was held at the Moncloa Palace and that was unveiled yesterday at the meeting of the Board of the Spanish employers that some attendees described as “a funeral” to the bleak picture of the business leaders to draw on our economy.
And the funeral was the scenario that Juan Rosell took the opportunity to ask business leaders support unreservedly to government reforms, despite the critical position CEOE has kept tax increases approved for the Income Tax and Companies.
And it was at that funeral in which some of the attendees told that during his speech, the president of the employers said that while Rajoy is not in favor of raising the VAT, may be forced to do it, and surprise.
If you sell on 90 day (credit) terms you need working capital,” said Garcia Legaz, an official just below ministerial rank.. Spanish banks are undergoing a wave of mergers in an attempt to build up their strength. The number of lenders is expected to shrink to 10 from around 40 before the crisis as the government forces them through various rounds of cleaning up of toxic real estate assets.. “Spanish banks are very reluctant to renew credit lines.
All the banks’ long term debt ratings were downgraded by at least one notch, and some suffered three notch cuts.
Thursday’s move came after Moody’s downgraded 26 Italian banks on Monday and followed a press report about a run at troubled lender Bankia, Spain’s fourth largest bank.
Last week, Spain’s government took control of Bankia SA and asked banks to increase provisions for souring real estate loans.
Moody’s had cut Spain’s sovereign rating by two notches to A3 in February, placing it in the middle of its investment grade rating scale.
The government’s borrowing costs shot higher on Thursday after data confirmed the economy was back in recession.
Prime Minister Mariano Rajoy said Wednesday his government, which is struggling to reduce the budget deficit, could soon have trouble financing itself in the bond market unless the pressure eases.
Government and central bank interventions in markets can alsoupset correlations in those models, he said.
Through March, Spanish banks held almost 150 billion euros of Spanish government bonds, up from about 76 billion at the end of November.
Losses of Spanishbanks could top 380 billion euros, according to the Centre forEuropean Policy Studies.
Capital Flight at BankiaPlease consider Bankia have lost 1,000 million in deposits in one weekBankia customers have withdrawn deposits worth over 1,000 million euros since the government announced its intervention last week, according to data presented suggest the board meeting yesterday.
On Wednesday, Bankia not respond to Reuters requests asking whether there were bank runs Thursday and no one has commented on the information published by the newspaper El Mundo in its paper edition.
According to this method, was at the meeting yesterday with senior management where the Chief Executive Officer, Francisco Verdú, brought the fact of multi withdrawal of funds: Bankia days would have lost a similar amount to 1,160 million withdrawn in the first quarter.
The withdrawal of money from customers Bankia is due to the mismanagement of the departure of Rodrigo Rato for the entity and the subsequent nationalization.
The amount taken out by bank customers is equivalent to all withdrawals made from Bankia in the first three months of the year, the paper said.
Scramble for Deposits Leads to System Wide CannibalizationHere are the key paragraphs from the above article.
In fact Santander is showing particularly aggressive in trying to attract customers disenchanted with Bankia have decided to withdraw their savings from the entity.
For his part, Jose Ignacio Goirigolzarri, has not made any statement on these data and harangued their managers to work hard to retain customers.
The new president of the organization claimed that “Bankia is a solvent entity, which continues to function quite normally and that offers total security.”.
In a further statement, the company said that when the government nationalized Bankia on May 9, it established that the bank was solvent and said its depositors had nothing to worry about.
Mike “Mish” ShedlockClick Here To Scroll Thru our Recent Post ListSpanish Bank Debt With ECB Up 15.7% in April; Surprise VAT Hike Coming Up; Moody’s Downgrades 16 banks; Capital Flight at Bankia; Scramble for Deposits Leads to System Wide CannibalizationPosted by Michael Shedlock at 7:36 PM.
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