When the former CEO of BBVA, José Ignacio Goirigolzarri (62) arrived at Bankia in 2012, the most critical year for the bank (19.2 billion euros of losses), everyone celebrated his appointment. They saw it as a guarantee that Bankia would succeed in getting back on its feet within the expected timeframe, not only in terms of its business but also terms of its stock market valuation.
Despite the threats and risks gripping Spanish politics and the economy, it doesn’t seem that foreign investors are particularly worried for the time being. At least that is what the figures for foreign investment in Spain indicated, both in terms of direct and property investment. It looks as if venture capital disbursement in Spanish companies has hardly suffered, not due to a lack of interest but because the operations being considered were not yet mature.
Experts in tax issues are busy these days trying to explain what has happened with corporate tax, the revenues from which have fallen no less than 85% in the January-July period. The Tax Office only raised 433 million euros compared with 3.011 billion in the first six months of 2015.
Spain’s socialist party PSOE doesn’t seem to be too worried about the fact the country may not have a 2017 Budget. But it’s increasingly clear to all of us that the lack of a budget will not be without a cost. On the contrary, it will greatly affect a large part of Spanish society. Almost all economists believe that the impossibility of drawing up new accounts, and updating certain items, could mean that the amount spent on civil servants’ salaries will be maintained.
Judging by the incessant comments these days from all kinds of financial experts and even independent voices, one of the best solutions for Spaniards in the face of the country’s serious pension system crisis is to sign up to a private pension plan. In reality, no-one has any doubt that the public pensions system will not be able to meet its commitment to providing a decent pension for future retirees, in line with their expectations. That said, are private pension plans the solution?
F. Barciela / F.G. Ljubetic |The news that a UK bank and a German lender are going to start charging clients for their deposits has raised the question of whether Spanish banks are thinking of doing the same. For the time being this deposits’ charge will generally apply to very specific segments of client business. The continued decline in margins at the Spanish banks is worrying; a consequence of the fact that interest rates on loans are increasingly lower while the remuneration costs on liabilities are maintained. In the end, the Spanish banks may not have any option but to bite the bullet…and charge for deposits.
F.Barciela / F.G. Ljubetic | Just as was expected, the ‘Opportunity Funds’ (or Vulture Funds as they are referred to) are starting to unwind positions and leave Spain: good news, because it shows that the days of bargains are over as the country is firmly on the road to recovery. But the fact these funds are leaving Spain doesn’t mean they will not have other opportunities. Now they are betting on countries like Brazil, Greece, Italy or Puerto Rico.
F.Barciela /F. G. Ljubetic | If the banks are still the protagonists in terms of granting mortgages to private individuals, another thing is new developments where their role is decreasing. Burned by what happened in the past, the banks are looking very closely, and selectively, at each new development proposal. This has meant that in the last few years alternative financing formulas have emerged which property developers are using to push ahead with their projects.
Spain’s banks currently have on their books something close to 213 billion euros in property risks (assets and loans). Is that a lot or not? Judging by the recent reports from the Bank of Spain or Moody’s, the total is rather worrying: and we are not talking about small change but about the fact that our lenders still have an amount of property on their balance sheets equivalent to 20% of GDP.
Wall Street’s ability to suprise the world with its strength seems boundless. While the stock markets in the emerging countries are sinking and the European bourses are almost stagnating, Wall Street’s indices have been breaking records since 2010, immune to bad news.