BANKS

Spanish economy 27th August 2012

Spanish government keeps the upper hand on banks reform

The new set of rules on restructuring and liquidation of ailing banking institutions planned to be approved next Friday confers full command to the Spanish government. The Bank of Spain will exclusively identify solvency failures and pit in place an early warning mechanism to redress potential deviations. But once public money is involved the task is conferred to a formally independent body, the FROB, but under tight governmental control. Politicians…

Spanish economy 23rd August 2012

Buy more brick for a worst price

CAPITAL MADRID, José Sánchez Mendoza.– Pay more, almost double, but with a comfortable loan that covers all or most of the amount. It’s a win-win situation, don’t you think? Though it may seem, this is not the lamp seller in a Moroccan bazaar’s talking but the candy that banks put in front of consumers to get rid of the housing stock that hampers their balance sheets. According to a study…

World economy 22nd August 2012

“Financial development can become a drag on growth”

NOTE: The following article is based on a paper by Economic Adviser at the Bank for International Settlements (BIS) Stephen G. Cecchetti and his colleague Enisse Kharroubi. The full publication is available at BIS website. You can also download it here. One of the principal conclusions of modern economics is that finance is good for growth. But recent experience has led many people to question whether this conclusion is definitive….

Companies 15th August 2012

Standard Chartered pays fine to save its New York business

For days, Standard Chartered executives had been negociating with multiple law-enforcement officials in New York in order to settle claims that it laundered $250 million for Iran. The final move came on Tuesday, when the british bank decided to open its wallet. The $340 million deal is huge, only beaten by the one reached by the Justice Department and the Manhattan district attorney over money laundering charges with ING bank…

World economy 8th August 2012

Standard and Iran: another punch in the face for the banking sector

It’s definitely not the best time for British banks. The last one under the spotlight is Standard and Chartered, until now regarded as a darling of the financial sector. The emerging markets-focused lender which managed to escape the effects of Europe’s debt crisis may now lose its operating licence in New York: US regulators alleged it hid $250 billion in transactions with Iran over nearly a decade. According to the…

Interviews 23rd July 2012

“In Spain, we shouldn’t have bailed out the bankers who sank their entities”

By Cruz Sierra, in Valencia | valenciaplaza.com | Bad timing. It must feel at least challenging to become chairman of the employers' association Cierval in the region of Valencia. The autonomous government recently asked Madrid for help to face its debts, while Madrid itself negotiates in Brussels softer deficit targets and the conditions of a banking bailout for the country's financial industry. José Vicente González said in an interview with VP that…

Markets 11th July 2012

What Wall Street makes of the Libor scandal

NEW YORK | Have Libor scandal shock waves reached this side of the Atlantic yet? There is no doubt they will. It may impact American consumers and the U.S. financial system: Barclays is the only bank confessing malpractices so far, although Wall Street has almost surely been involved in the same dynamics. So far we've only seen the tip of the iceberg but it sends a warning signal to the…

Spanish economy 11th July 2012

Spain badly needs a banking overhaul

MADRID | The conditions imposed on Spain upon access to rescue funds for its ailing financial system, point to the need to undertake a major overhaul both in banking supervision and restructuring. The Eurogroup urges a handover to the Bank of Spain of powers hitherto retained by the ministry of Economy. It also forces breakup and/or severe downsizing of troubled banks, plus a resolution scheme to transfer part of the burden…

Markets 29th June 2012

Euro stress-free area

By Julia Pastor, in Madrid | After so many fruitless meetings, conversations and rounds nobody expected that the European leaders would be able to reach a more than reasonable agreement for Europe, that tough Germany would relax its position towards its Southern partners, and Spain and Italy would resist before the steam engine of the euro zone. But it happened. Banks will be recapitalised directly with the European Stability Mechanism…

World economy 27th June 2012

The consequences of the U.S. banks downgrade

NEW YORK | Last week 15 major banks, including the nation’s three largest institutions, JPMorgan Chase, Bank of America and Citigroup, which together have more than $6.4 trillion in assets, suffered credit ratings cuts by Moody’s. No matter their efforts to strengthen their operations since they received a warning in February, their core businesses still present structural weaknesses, the ratings agency said. Bank of America, which owns Merrill Lynch, and Citigroup,…

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