Spanish banks covered €16 billion of failed smaller entities’ bill

Miguel Martín, president of the Spanish banks’ association AEB, this week argued that the private sector has already had to foot the bill for at least half of all losses caused by the financial crisis. Martín pointed at the entities that needed intervention, including all savings banks, and revealed that the total has so far reached €32.9 billion.

The healthy banks have injected more than €16 billion via the deposit guarantee fund FGD and the restructuring fund Frob to cover part of the hole left mainly by failed small public entities. Martín mentioned Bankia-BFA’s franchise Banco de Valencia (€5.5 billion), Bankia-BFA itself (€4.46 billion), Caixa Catalunya (€2.97 billion), Novagalicia (€3.6 billion), Banco Mare Nostrum (€916 million), CEISS (€525 million) and Banco Gallego (€245 million).

The Spanish banking sector doesn’t feel too vindicated after having shouldered part of the pain of the system reforms and giving support to the financial policies of the Rajoy government. Martín complaint about how belligerent some sectors of the public opinion have turned against bankers.

In contrast, troubled entities have gobbled €75.3 billion in cash from the public purse or 7.2% of the national GDP, according to data collected by AEB–which includes aid from the European Stability Mechanism fund. Martín said he expects half of that money never to be returned, and added that investors in preferred shares have had to take in €12.97 billion in losses to clean failed banks’ balance sheets.

AEB’s president was more optimistic about weak entities paying back future help packages after they are restructured into the private sector. “It will be hard, but not impossible,” Martín opined. Spain’s market listed banks have seen their value decrease since 2007 to €120 billion from €180 billion.

* Source: valenciaplaza.com

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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