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.
Spain’s latest bank reform won’t be its last 11 May 2012 Lenders must set aside a further 30 billion euros against real estate losses and segregate troubled property assets. Though this is helpful, bad debts will rise elsewhere. And the government is providing less than 15 billion euros of fresh capital. That won’t restore confidence.
Bankia rescue leaves former bailout supremo behind 10 May 2012 The Spanish bank’s woes have cost chairman Rodrigo Rato his job. That marks an ironic twist for the man who was IMF chief at the start of the crisis, charged with dispensing lectures and bailout money to the fallen. It’s a timely reminder that theory and practice are worlds apart.
Madrid hopes it’s fifth time lucky 10 May 2012 Spain is going back to the drawing board again to clean up its banking system. Since cash is short, it will be tempted to use financial engineering. But if it’s too clever, investors won’t be impressed.
Euro zone carry trade has limited shelf life 9 May 2012 Spanish and Italian banks are still loading up on sovereign bonds with cheap ECB loans. There is room to buy more. But local banks can’t fund Madrid and Rome indefinitely, and with funding markets still dysfunctional, money could run out sooner than expected.
Spain finally owns up to its banking mess 8 May 2012 Madrid has dropped its resistance to bailouts and is preparing to inject 7-10 bln euros into Bankia. Propping up the big former savings bank is necessary, but it’s only the first step in what is hopefully a definitive cleanup. Spain cannot afford any more half-baked reforms.
Repsol still not a tempting takeover target 4 May 2012 The YPF fiasco has knocked a third off the Spanish oil major’s shares, sparking bid speculation. But even if rivals felt acquisitive, refining exposure and lingering YPF risks are deterrents to an offer. The new Repsol isn’t without prospects. But it’s cheap for a reason.