Things In Spain So Good, Banks Borrow A Mere Record €140 Billion From ECB In July

This was our feeble attempt at MSM headline creation. According to Bank of Spain data, Spanish banks were responsible for borrowing a third of all the amount lent out by the ECB in July, or €140 billion (and €130 billion net of redeposits). This number is higher than the already record €136 billion the month before. And even though it is presumably priced in, it is somewhat hilarious to think that an entire European country's banking system continues to subsist purely on the liquidity provided by the central bank: Spain continues to be locked out, joining Greece and likely Portugal in the biggest capital markets shut out in history as no matter what the National Lampoons Stress Tests (remember those?) indicate. But yes, thanks to the temporary EUR plunge to 1.16 Germany managed to pull off a record economic quarter as surging exports carried the Eurozone for another month or two. All that is now over, and with the market anticipating QE2.1/3 out of our own Fed any time soon, dollar weakness will be persistently just around the corner, which effectively brings the European Golden Age to a close.

From Reuters:

The country's banks borrowed 140 billion euros ($180 billion) from the European Central Bank in July, up from 136 billion in June, the data published on Friday showed.

Taking off the amount banks then redeposited at the ECB, the total borrowed was 130 billion, up from 126 billion euros, just under a third of the overall amount lent by the ECB.

Spanish banks had tapped the facility for 90 billion euros in April before interbank markets gummed up on fears other euro zone periphery countries could face debt crises along the lines of Greece.

"It's already discounted that in August, banks will still be accessing ECB funding," he said.

"Everyone is now looking toward September and October to see if the markets open to the smaller Spanish banks and there is investor appetite for their debt."

Smaller banks in Spain lost access to interbank markets in late May heading into June over concerns that Spain's debt problems could come to rival those of Greece, where banks are heavily dependent on ECB financing.

Reports at the beginning of August suggested they were still struggling, even if larger banks had even returned to debt markets as financing costs had eased.

Euro zone banks borrowed a total of 448 billion euros in July, down from 496 billion in June.

Borrowing jumped in June partly because of funding difficulties, but also as banks built up funds as a precautionary measure before the expiry of 442 billion euros at the start of July.

Comments

[Assetman]

Actually, I thought it was a very nice title.  Made me feel all warm and fuzzy and stuff.

[Temporalist]

The Gain In Spain Is Mainly From Trichet?

[bada boom]

How much does Spain import from Germany?

[Tomash]

So why the biggest Spanish bank Santander is on a buying spree and bids for all frgn entities (ie AIB units?) it can find?

Doesn't make sense for me...

In the meantime Spanish CDS wider by 16bps at 217bps...

[etrader]

 It guarantees survival  by getting on the muti national SIB* list.

* (Systemically important banks)

[Goldenballs]

Sooner the Euro and the EEC collapse the better.Eastern Europe and Southern Europes problems are not ours so get on with it.The whole gravy train is an unelected disaster thats needs to be stopped asap rather than later.

[Strongbad]

The rain in spain stays mainly in the plain ... and is dropped from German helicopters.

[M.B. Drapier]

The water cycle flushes it all back to Germany, where it helps to keep bad German creditors whole.

[Amsterdammer]

You also have to offset this figure,however staggering,

with the fact that July saw the largest amount of

sovereign refinancing for the Spanish government,24

billion euros worth of 'bonos'

[iPood]

ECB August Report ....

The results of stress tests conducted on 91 of the European Union's largest banks this summer tended to understate the progress made by banks in strengthening their balance sheets, the European Central Bank argued in its monthly report for August.

http://bit.ly/c4Ilsb  (Ironic that they drew down $1 billion from Fed swap lines as of 6/30/10 and Euribor spiked in August.)

[Strongbad]

I was just in Spain in autum - you can hardly tell there is 20% unemployment; people just go about their normal Spanish business of smoking Marlboros, eating cured pork, drinking wine, and window shopping.

It was quite pleasant, but almost Orwellian in a sense; no one acted as though anything was wrong. 

[M.B. Drapier]

Meanwhile, Plan B is go.

[hellboy]

Nice to know, but the real interesting part should be which banks in Spain are doing the borrowing... anyone have some info one that / some names and sums?

Thanks!

[Goldenballs]

Europe is going down the pan,same shit different day, ... better call International Rescue ...... Thunderbirds are Go .................................. :)