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Spanish Bank Deposit Outflow Surge Continues In August

Tyler Durden's picture





 

The crux of the "pain for Spain" was exposed in August, when the world learned that despite all attempts to the contrary, Spanish banks are no longer perceived as safe by the locals, and the result was a record 5% deposit outflow in one month from local banks: cash that was promptly redeposited elsewhere in the Eurozone. And as money flow theorists know all too well, if cash is exiting the Spanish banking system - i.e., if the confidence is just not there, not only is growth impossible, not only are any austerity plans or otherwise to push GDP higher futile, but all attempts to save the local banking system - which is now reliant on the ECB for funding to the tune of a record €412 billion, and which means the country has already been bailed out by the ECB - are futile and merely sunk, literally, costs. In short: the deposit outflows continued, and while not at the record July 5% pace, a whopping €17 billion, or 1.1% of total, deposits left the country for good and is unlikely to come back.

From Reuters:

Consumers and firms continued to pull their money out of Spanish banks in August but at a slower speed than in July, with private sector deposits falling slightly more than 1 percent as Spain was sucked into the centre of the euro zone debt crisis.

 

Private-sector deposits at Spanish banks fell to 1.492 trillion euros at end-August from 1.509 trillion euros in the previous month, hitting their lowest point since April 2008.

Which also means that if the continued Spanish government cash decline persisted into August after plunging from March to July (as we reported before), then at this point not even a long-overdue bailout request by Rajoy will do anything more than push up Spanish bonds for a week or two before the Spanish house of cards finally comes tumbling down.

But back to Spain's deposits, or lack thereof, in today's scary chart of the day:

Naturally, the above chart means that with the ECB needed to step in Spanish banks, the entire country has already been effectively bailed out.

And a detailed breakdown:

Today, however, it is not Spanish banks that will dominate the newsflow, but the resumption of Spanish riots as Rajoy announces shortly the details of his plan to promote futher austerity, even as more and more insolvent regions demand that the insolvent government bail them out. From the FT:

As protesters descended on Spain’s parliament for a second night on Wednesday, Mr Rajoy called on Spaniards to ignore “short-term interests”. His government is also preparing to unveil a new reform programme and the results of a banking stress test.

 

There was more trouble for Mr Rajoy in the regions when Castilla La Mancha, run by his centre-right Popular party, requested a €800m bailout from the central government. Castilla La Mancha is the fifth of Spain’s heavily indebted regional administrations to request financial assistance from Madrid.

 

The political turmoil continued to put pressure on Spanish stocks, with the Ibex share index falling 0.6 per cent on Thursday morning. On Wednesday, events in Spain triggered a sell-off of European shares as investor concerns mounted about the eurozone’s fourth-largest economy.

 

The financial pressures on Mr Rajoy’s government have been intensified by a constitutional crisis brewing over the Catalonia region, which called snap elections this week that could hasten a move toward independence.

 

“Spain is increasingly slipping from his hands,” said Alfredo Pérez Rubalcaba, the leader of the country’s opposition socialist party. “There are very clear fractures in Spain, and the one I am most worried about is social fracture.”

 


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Thu, 09/27/2012 - 08:18 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Spanish Bank Deposit Outflow Surge Continues

 

Did NOT see it coming!

Thu, 09/27/2012 - 08:26 | Link to Comment midtowng
midtowng's picture

The news media will paint this as bullish. The headline will be:

Spain deposit outflow slows

Thu, 09/27/2012 - 09:21 | Link to Comment Thomas
Thomas's picture

The gain in Spain goes mainly down the drain.

Thu, 09/27/2012 - 09:29 | Link to Comment HobbyFarmer
HobbyFarmer's picture

It seems so obvious to all of us .... "why would anybody leave their money in corrupted banking system of a bankrupt nation like Spain?"  And yet, why is Tyler not yet reporting similar runs here in the US?  What will it take to reach the collective US savers and get them into action?

Are we all that ahead of the curve?  (for the first time in most of our lives, I'm sure).

Thu, 09/27/2012 - 10:12 | Link to Comment pods
pods's picture

Well one thing it would take is savings.

pods

Thu, 09/27/2012 - 10:15 | Link to Comment metastar
metastar's picture

It felt good last week when I pulled my money out of Shiti bank. The scum made me wait two days to take cash. I waited two days and came back for the cash.

Screw em all.

Thu, 09/27/2012 - 10:50 | Link to Comment pods
pods's picture

The dirty little secret about those waiting times is that usually they are shuffling cash around to make good.

Bank draft no problem. Cash, problem.

That ought to tell you what shape we are in.

If things get bad I have a feeling that cash will decouple from credit.  

pods

Thu, 09/27/2012 - 10:31 | Link to Comment stocktivity
stocktivity's picture

I can recall reading a year ago how a Spanish bailout would not be possible because of the size. Now if Spain asks for a bailout, it will be perceived by the markets as positive news. It's all Bullshit!

Thu, 09/27/2012 - 08:13 | Link to Comment ZeroAvatar
ZeroAvatar's picture

Don't worry, it's ok....they'll just lever-up the ESM to 4 or 5 trillion Euros, problem solved.

Thu, 09/27/2012 - 08:15 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

If that doesn't work they'll increase it to 8 or 10 trillion Euros......don't push them.

 

Thu, 09/27/2012 - 08:22 | Link to Comment trebuchet
trebuchet's picture

No they won't not this time. 

 

Merkel and AAA club have very specific agenda - banking supervision + tax, fiscal union then next round of monetary fixes. 

For those in trouble in the meantime, just have to make do with EFSF/ESM. 

This should cover spain but not Italy.  When the PIIGs see the trough isnt going to be refilled on their watch, they'll fight with each other to get what they can soonest... 

 

Which means 2012 Q4 watcch rome burn while the rest of the PIIGs fiddle...

 

Thu, 09/27/2012 - 08:27 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

No they won't not this time.

 

Dammit....yes they will.....and when I change my mind you'll be the first to know.

 

Thu, 09/27/2012 - 08:15 | Link to Comment lolmao500
lolmao500's picture

It's OK, the US treasuries are there as the world's pillars of stability!

Thu, 09/27/2012 - 08:16 | Link to Comment Debtonation
Debtonation's picture

They have deposits?

Thu, 09/27/2012 - 08:34 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Just like the Federal Reserve has "assets" on its balance sheet.

BTW..."deposit outflow" is nicespeak for "withdrawal", right...?

Thu, 09/27/2012 - 08:25 | Link to Comment Antifaschistische
Antifaschistische's picture

"worried about social fracture".....ARE YOU JOKING!!! the euro experiment is designed to fracture cultures and subcultures....you are way too late for the social solidarity bandwagon

Thu, 09/27/2012 - 08:26 | Link to Comment yogibear
yogibear's picture

The US will be there eventually.

Thu, 09/27/2012 - 08:45 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

Negative.  On a long enough timeline, the survival rate for the US drops to zero.

Thu, 09/27/2012 - 08:27 | Link to Comment firstdivision
firstdivision's picture

Did WTI get all economic data releases early?

Thu, 09/27/2012 - 08:31 | Link to Comment timbo_em
timbo_em's picture

El Pais with some key figures from the 2013 budget: http://elpais.com/elpais/2012/09/27/inenglish/1348747684_050126.html

bottom line: overall spending will rise by more than 9 percent in 2013. The rest is hope and pray like "The administration is hoping the VAT increase will yield an additional 10.134 billion euros in 2013". Absolute madness.

Thu, 09/27/2012 - 08:34 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Anyone have any thoughts on where that outflow is going?

Thu, 09/27/2012 - 08:36 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

I have the same question every time I flush...

Thu, 09/27/2012 - 08:40 | Link to Comment krispkritter
krispkritter's picture

Ooooohhh Arrrrrchhieeeeee!

Thu, 09/27/2012 - 08:39 | Link to Comment trebuchet
trebuchet's picture

german property, banks, bunds

Thu, 09/27/2012 - 08:48 | Link to Comment timbo_em
timbo_em's picture

You are right but not all money that leaves Spain ends up in Germany, Austria, Finland or the Netherlands. More and more money is moved to destinations outside the eurozone (I assume South America, Scandinavia). This can be seen when one takes a close look at TARGET2.

Thu, 09/27/2012 - 08:50 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

It's like a massive game of fiat expatriation.  "Money velocity" has taken on new meaning.

Thu, 09/27/2012 - 08:59 | Link to Comment Dareconomics
Dareconomics's picture

Spain's economic, fiscal and financial positions are continuing to destabilize, and now the political arena is catching up:

http://dareconomics.wordpress.com/2012/09/26/black-swan-of-barcelona/

Thu, 09/27/2012 - 09:05 | Link to Comment youngman
youngman's picture

When the boots on the gorund do not trust the banks....on wonders.......when do these banks start laying off 1000's.....I would think many of the jobs are gone now....like a mortgage lender...his desk has to be empty...now the ATM filler..he is working overtime...maybe they have job flexibility...German bunds....not me....got gold

Thu, 09/27/2012 - 10:41 | Link to Comment Urban Redneck
Urban Redneck's picture

(deposit outflow %) x (average leverage)

why does anyone leave in money in these hollowed institutions

Thu, 09/27/2012 - 13:21 | Link to Comment BattlegroundEur...
BattlegroundEurope2011's picture

Ole Biatchez!

Do NOT follow this link or you will be banned from the site!