A Bad Bank in Spain

In Spain it was known that a housing bubble would explode sooner or later. The houses were valued very high and with unrealistic prices for banks to give the credits.

In 2004 and in 2006 the Bank of Spain told to Caja Madrid:

“The property risk is growing by 55% (…) and it will continue increasing upt to very high rates”

Then the housing bubble finally exploded and Spain fell in a deep crisis.

Now in the last quarter of 2012, the crisis seems to have no solution and Brussels has imposed to Spain to create a “bad bank” which will be paid with public money.

Brussels validates the reforms of the Government of Spain and the International Monetary Fund (IMF) has recommended liquidating the non-viable banks as soon as possible.

The International Agency, the Commission and the ECB give the approval to the bad bank and want it to be operative the first of December.

The EC and the ECB ensure that the reforms which Spain agreed to comply if it request the rescue is “in line” with expectations. But FIM believes that more efforts have to be made Sareb (the bad bank that will manage the property portfolio of toxic banks) ready to open by the end of November.

Noemí Gómez 

KUTXABANK: THE NEW BASQUE SAVINGS BANK

BBK in Biscay, Kutxa in Gipuzkoa and Vital in Alava board of directors signed two months ago basque savings banks merger. It’s a good new for basque economy, because all the deal of the three savings banks will mix in the new bank, called KutxaBank. This bank will start to operate this month.

The incorporation of the three savings banks will create the fifth savings bank in the ranking. It had 75,091 million euros in assets the last day of 2010. It will have more than 9,000 workers and more than 1,300 offices. The offices will be apart from in the Basque Country, in Madrid, Barcelona and Andalusia. We have to remember that six months ago BBK take over Andalusia’s CajaSur. His principal capital will be around 12.8%, perfect competence to take over more savings banks if it’s necessary.

In the new savings bank, BBK will have the control with a participation around 57%, and 12 chief executives, Kutxa’s participation will be around 32% and 6 chief executives, and to finish, Vital the 11% of the participation with 2 chief executives. BBK’s director will be the director of the new savings bank, and Kutxa and Vital’s directors will get the first and second vice presidency respectively.

The new savings bank will have his registered office in Bilbao, where the economic-finnancial head office will be located. Computing and Human Resources activity will be located in Donostia-San Sebastián, and the institutional trades in Vitoria-Gasteiz. They decided this kind of distribution, to divide the payment of taxes between the three foral funds.

BBK, Kutxa and Vital will keep their legal status, the administration of their charitable work and the trade name on each historical territories. They hope that with the merger the savings bank Kutxabank will multiplicate for three the outcome, from 380 million euros in 2010 to 846 million euros in 2015. Charitable work will increase 133%.


Erik Rios Salazar

The merger of the Basque savings banks has become an impasse

The economic outlook is in full swing. It is a process of conversion of Spanish savings banks. While Basque banks still have not reached an agreement. The merger of BBK, Caja Vital and Kutxa has entered a phase of impasse. After having the possibility of full integration, trading has been cooled without clarification. Although the 3 entities will soon have to choose the way to gain size and become more competitive.

While the rest of Spanish savings banks are moving at high speed due to the decree of recapitalization of financial institutions. Basque institutions have leading positions in credit. But they have not finished the process of merging.

It is the third attempt at integration that result swamped. Basque banks can not afford to sit back, because other banks are being strengthened.

At the moment nothing is known. In the coming weeks should reach a conclusion. Otherwise the negotiations could last until June. Although political representatives want an answer immediately. Socialists understand that the merger can not wait any more, because the financial market "is a tsunami that moves and / or you take size, muscle size, or if not, you're lost." They also say that if Kutxa continues blocking the merger of three, will become a fusion of two.

But if the process is too long, BBK has already warned he will not resign to resort to more purchases to gain size, a move that definitely dynamite the merger of three, as Kutxa have the same right to do the same.

Saioa

More troubles for banking stocks

Yesterday the stock market in spain had a big decrease in two quotes ( BBVA and Santander) with 3.52% and 3.45% respectively. It was caused because the BBVA bought a Turkish bank and the brokers are not very confident with this news and the Santanders CEO in Great Britain went to work with another bank. But this was not the only problem yesterday in the stock market, due to we are waiting for the decision for the Federal Reserve, it is spected that they will invest 600000 million in the bank system buying goverment bonds. It is calculated that this two banks moved at about 1002.84 million euros.
But there were also two good news in USA. In september the orders to the factories increased and index of service sector activity.

Ion Ander