Spain's Mad Dash TBTF Or Bust (Literally) Scramble
Since the financial crisis erupted in 2009, it would appear that Spanish banks saw the writing on the wall early on. Following the path laid out by their American cousins, the following chart suggests that en masse a decision was made that bigger was better (and safer) as the Too Big To Fail model was clearly the industry standard. From 50 major entities, the Spanish banking system is now dominated (well pre-total collapse that is) by 14 considerably larger firms. This is about the most literal definition of the old saying: "TBTF or bust." Although in this case it is "and"... Because the bigger the firm, the more systemically entwined it becomes and the less capable the government is of letting any pain actually occur... quite remarkable. How long before there is just one big Spanish bank? (bad bank, worse bank, worst bank, all coming soon).
And in the funniest news of the day, we now learn from Reuters that after over a month of begging, the Spanish Bad Bank, or SAREB, has finally found its first foreign investor: that pinnacle of UK bank solvency and integrity - Barclays.
Britain's Barclays will invest in Spain's so-called 'bad bank' as a signal of its commitment to helping fix the country's banking troubles, a person familiar with the matter said on Friday.
Unclear how long until the SAREB is forced to repay the favor and invest money into Barclays. In the current ponzinomic global house of card, it won't be too long.