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Spanish economy 30th May 2012

Spain’s main political parties come together against the European rescue option

By Julia Pastor, in Madrid | Contrary to what might be assumed, on Wednesday Spanish politics answer to the EU was strong despite the severe turbulences affecting the country’s financial system: the argument is that it does not need to rescued, but its debt needs to be guaranteed. President Mariano Rajoy and the opposition leader, the Socialist Alfredo Pérez Rubalcaba, agreed to hold this position together in order to “defend the…

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Spanish economy 30th May 2012

Setting BANKIA as the standard for provisioning might lead to disaster

MADRID | Bankia’s Chairman brilliant performance in transforming the hole he found in his company as an opportunity to ransack the public coffers, has turned him in government’s shadow financial policy maker. His recipe to cure banking ills will receive little praise in economic circles. But it sounds extremely simple and effective. Writing down bad loans resorting to taxpayers’ money amounts to a rather dull endeavour. Bur indulging in such…

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In Europe 29th May 2012

It’s the Single Market, stupid!

MADRID | CAPITALMADRID.COM In the years 1992/93 the Spanish authorities struggled for longer than events recommended to keep the exchange rate of the peseta. Something similar might be going now on, but in another dimension, as the government still defends the good health of Spain's financial system. Back then, the stabilisation mechanism in place determined a fixed exchange rate for the peseta, let's say in short, against the German mark….

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Companies 29th May 2012

Lenovo expands capital in Spanish branch

MADRID | Lenovo, the Chinese PC giant, recently carried out two capital injections in its Spanish subsidiary. According to the business daily Cinco Días, on April 24 there was a capital increase of €36 million, with the total capital subscribed resulting in €37.47 million. A few days earlier, the company had made another injection of capital of €1.29 million. Isla Ramos, CEO of Lenovo in Spain, explained that such capitalisation is linked…

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Markets 29th May 2012

BANKIA plight undermines Spain’s credibility

MADRID | Utter disarray might sound a mild and tender description for the knock out effect BANKIA crash landing has inflicted on Spain’s credibility. Only a few days ago, the government downsized the issue to a trifle €7 billion support. The bill runs now at €24 billion, with the prospect to rise still higher. Spending such a huge pile of money doesn’t stand as the most worrying fact. After all,…

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In Europe 29th May 2012

Who will audit Brussels?

By Carlos Díaz Guell, in Madrid | Following the steps taken by the Spanish government to increase the requirements of capital provisions to the banking system from 7% to 30%, that is some €30 more billion, the Eurogroup, seen the distrust generated by the Bank of Spain’s actions, asked the Rajoy government to commission an independent valuation of property assets on the balance sheets of financial institutions. The international financial authorities and…

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Markets 28th May 2012

Why BANKIA rescue shatters confidence in the Spanish financial system

MADRID | A few weeks ago, the Spanish government adamantly denied any hint on disbursing a single penny in banking sector support. A few days ago, it acknowledged the necessity to do just the opposite for anchoring ailing entities. In a desperate face saving attempt it discarded such a funding might lead to open aid, support being provided at a punitive 10% interest rate. But BANKIA discomfiture has led to a…

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Markets 28th May 2012

Fixed income investors favour option of ECB buying Italian, Spanish bonds

LONDON | Barclays Capital asked 80 of their fixed income clients about what the European Central Bank should do to calm markets down and deflate the ever more acute euro crisis. Investors from outside the euro zone said the central bank’s best chance would be to return to the markets to buy sovereign debt from Italy and Spain, cut interest rates and inject long-term liquidity into the banking system, but…

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World economy 25th May 2012

Chinese and Mexican rain of investments come to Spain

By Julia Pastor, in Madrid | China and Mexico made Spain’s day on Friday. Both countries announced several contracts with Spanish companies in very different sectors, injecting some movement in foreign investment flows into the lately much battered euro economy. While China signed agreements for an amount of €500 million, the Mexican oil company Pemex reported it will invest €247 million in Galicia’s naval sector. In his official trip to…

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Companies 24th May 2012

The Bankia + CatalunyaCaixa + Nova Caixa Galicia nuclear option

By Julia Pastor, in Madrid | The financial markets were anxiously waiting for explanations about the much talked about doomed Bankia. The Spanish minister of Economy Luis de Guindos spoke at last. He said that the State will support Bankia’s solvency with all the capital the entity may need. According to De Guindos, Bankia will need at least  €9 billion to meet the latest reform’s requirements. This figure includes €7 billion…