BARCELONA | By Joan Tapia | The emergence of the leftwing party Podemos (We Can) and the ghost of a forthcoming political instability weight more on Spanish politics than an unquestionable economic improvement (which is too slow and risky). Anyway the advantage of the conservative Popular Party (PP) in power compared to the Socialist Party (PSOE) was reduced during summer from 8.8 to 3.6 points.
MADRID | By Ofelia Marín-Lozano | The Spanish banking system got positive grades in the stress tests for two main reasons: the discrepancy between the accounts published by the end of 2013 and its (minimum) revision by the ECB’s inspectors. According to the asset quality revision (AQR), carried out before the stress tests, the capital ratio of the Spanish banks was only reduced by 20 bases points after the ECB’s revision. This is a minimum adjustment, slightly below the French or German banking system, but well below the Italian, Belgian or Dutch banking. It is certainly well below the big discrepancies detected in Greek and Portuguese banks.
MADRID | The Corner | Spain’s real GDP increased by 0.5% q/q in Q3 14 (flash estimate), in line with market consensus. Experts at Barclays believe that most of the growth contribution came from domestic demand, as weak eurozone growth in Q2 and Q3 likely implied soft external demand from key trading partners, including from the largest three economies.
MADRID | The Corner | The Spanish economy is now placed number 33 among the World Bank’s 2015 Doing Business ranking, improving on last year´s placement of 52. The results of the report show that Spain now offers greater facilities for entrepreneurs. Spain has improved in four of the ten regulation areas that value the ease of doing business, and has improved from 72.24 points to 73.17, closer to the 100 total, which measures best global practices regarding business regulation.
MADRID | The Corner | The Spanish Confederation of Small- and Medium-Sized Companies (CEPYME) points to a “nascent trend” towards a normalization of credit markets, which will permeate down to the real economy over the course of next year.
MADRID | The Corner | The ECB did not find any capital shortfall in the Spanish banks, which all passed the highly awaited central bank’s stress tests. Results made public on Sunday reveal that 25 European lenders failed while the other 105 succeeded. Among the big fish only the Italian Monte dei Paschi, the world’s oldest, appears in the failure list. Those 25 European entities will have to face €24.6 billion capital shortfall, but considering 13 of them have already issued part ot these capital needs, they will only reach €9 billion.
LONDON | By Antonio García Pascual at Barclays | The most recent labour market data have been improving at a faster pace than we had envisaged, including results for the Q3 14 Economically Active Population Survey (EAPS). The EAPS shows that employment increased by 151k in Q3 (private sector +155k; public sector -4k). The number of unemployed fell by 195k, standing at 5.4mn. The unemployment rate stood at 23.7% (24.1% sa), compared to 24.5% in Q2 (24.7% sa). The participation rate continues to fall, to 59.4% (sa), albeit at a moderate pace – this is also consistent with ongoing net migration outflows.
ZURICH | By Ignacio Sanz at UBS | GDP expectations continue to improve, NPLs are starting to come down although we do not expect write-backs for any bank, capital looks comfortable ahead of AQR and banks show a healthy funding while underwriting new deposits at c0.5-0.7%. The market knows all that with banks trading north of 1x NAV15e although for retail banks making more than 10% ROE with 0% rates is challenging.
MADRID | The Corner | The BdE is working on the possibility of establishing a new reference index known as Euribor Plus. The main characteristic would be the form of calculation, which would only take into account prices (interest rates) for transactions instead of reference prices announced by financial institutions.
MADRID| The Corner | According to analysts at Afi, “the pattern Spanish people are following to exit the crisis is a recovery based on a private savings drop and a slower pace in debt repayment.”