The impact of Brexit on the markets has gone through different stages. There was the initial upheaval in the wake of the referendum result, which had its maximum effect on June 24 when the Ibex recorded its biggest ever fall. And now the stock market and European public debt yields have recovered to pre-Brexit levels.
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.
Italy is threatening us with another time bomb. The country’s banks have 360 billion euros of doubtful loans and the EU (that is to say the sinister Eurogroup), as intelligent as ever, is pressuring for the bail-in rules, to which ultraliberal & co are so addicted, to be implemented by the book.
Fernando Fernández is a member of the board at Bankia and Red Eléctrica. Apart from the challenges presented by the macroeconomic environment and the technology revolution, he believes that Spain’s banks have to establish a new kind of relationship with their clients and consolidate the sector’s new size.
For once, BBVA chairman’s words have been a kind of premonition. Last week, when he said rather desperately that “negative interest rates are killing us,” he was not referring to Popular. But the fact remains that a few days later, the bank with Angel Ron at the helm announced a capital hike for 2.5 billion euros, slightly less than half of its stock market value. The aim of the operation is to offset the impact of future regulatory requirements and the shortfall related to the “floor clauses,” calculated at nearly 4.7 billion euros.
Francisco López | BBVA chairman, Francisco Gonzalez, is the one who usually speaks out about the banking sector’s problems, without worrying too much about the criticisms he may receive. González was the one who most actively spoke out in international fora (in particular at the Institute of International Finance (IIF)’s spring meeting) about the bad situation of some of the savings banks, although by doing that he damaged the image of the whole Spanish banking sector.
In Sober Look, Marcello Minenna gives us a clue about a possible new breach in the euro’s structure. A few years ago (2011-2012), when the euro was going through its worst time, one of the consequences was that the central banks in the peripheral countries increased their debt position with TARGET2.
F. Barciela / F.G. Ljubetic | The crisis forced Spain’s banking industry to cut its number of branch offices from 46,000 in 2008 to 31,000 at end-2015, the lowest figure since 1983. But now it’s technology, the Internet and mobile which will force the banks to continue reducing their branch networks. This is a challenge facing banks across Europe and the US.
For the last four years, Jose Juan Ruiz has been chief economist at the Inter-American Development Bank (IDB), the largest multilateral development aid agency in the region, surpassing the World Bank. Despite the fact LatAm has suffered a massive shock, one of the biggest differences this time round compared to previous slowdowns is that the region has $600 billion of international reserves.