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.”
MADRID | The Corner | In 2014, the Spanish stock market could register the largest number of IPOs since 1989 with a total of 17 operations, according to the Spanish Stock Exchange (BME). Up to present, eleven firms have won approval for initial public offerings with capital flows amounting to €4.8 billion.
MADRID | By JP Marín Arrese | Markets are beginning to feel deeply concerned about the mounting uncertainty the separatist movement in Catalonia has created. Observers do not yet discount a unilateral independence declaration, and are becoming increasingly alarmed at the open challenge to Madrid’s authority. Events could yet spiral out of control and into the unknown.
MADRID | By Fernando G. Urbaneja | There is a consensus amongst Spanish economists, who are forecasting a growth in GDP of 1.3% in 2014 and 2% in 2015. The Government shares this view and, on this basis, has already outlined the draft of next year’s budget. It believes that the “recovery and increased employment” phase is already under way, and in fact, that Spain is showing better indexes than the Euro zone average.
(By Barclays) | The Spanish government presented the details of the 2015 draft fiscal budget on Wednesday and the updated macroeconomic outlook underpinning it. There are few changes on the fiscal targets and projections, although the government now expects the economy to grow this year by 1.3% and next by 2% (Barclays: 1.2% and 1.8%). The budget minister in the press conference saw very little risk of the sovereign meeting the deficit target of 5.5% of GDP this year.
MADRID | By Fernando G. Urbaneja | The debate about the independence of Catalonia is at the centre of Spain’s political concerns. The Catalan Government and the parties supporting it -covering a broad spectrum, from the centre to the extreme left- have taken every step to call the referendum (called query) that would open the door to independence. The Spanish authorities have taken steps to prevent a consultation-referendum which it says contravenes the text and spirit of the 1978 Spanish Constitution.
MADRID | By JP Marín Arrese | The Spanish Budget 2015 aims at delivering growth and jobs. Yet, the draft disclosed on Tuesday shows the limited scope for enforcing such a goal. The foreseen improvement in the economic environment would increase available resources through enhanced taxable income, a shrinking in unemployment and the debt-servicing bill. The Government intends to use the extra margin of manoeuvre to lower personal income and corporate taxes while increasing public investment. Yet, the amounts at stake hardly represent any sizeable boost for GPD.
MADRID | The Corner | There is nothing better than politics to add volatility to the markets. After Catalan leader Artur Mas formally convoked a Nov. 9 referendum for Catalonia independence, the Spanish government is holding an emergency cabinet meeting Monday to launch a lawsuit aimed at blocking the vote. In the short term this clash could widen spreads in Spain and affect domestic banks with exposure to Catalonia, Morgan Stanley pointed out. The most probable scenario is a fiscal agreement, they believe.