Spanish Banks Petition To Convert Historical Losses Into Bank Capital

Tyler Durden's picture

In what has to be the most insane level of desperation, the Spanish banking system is lobbying to turn its deferred tax 'assets' into fungible capital to meet new stricter Basel III requirements. In other words, the Spanish banks believe that capitalizing historical losses provides a fungible 'stash' of capital against future losses... Following this morning's round of incredulity from the Spaniards, we have no words...

Via Reuters,

Spanish banks are lobbying the government to turn more than two thirds of their 50 billion euros ($65 billion) in deferred tax assets into state-backed tax credits that would boost their capital but add to the state's debt, three banking sources said.


The so-called deferred tax assets (DTAs) are created when a bank makes losses or writedowns that it can offset against future tax bills when it returns to profit.


Under stricter Basel III rules on capital, being phased in as of January 2014, most forms of DTAs will no longer be allowed to count towards capital, while tax credits will be.


Spanish banks are asking the government to convert between 15 billion and 30 billion euros of their DTAs into tax credits, the banking sources said.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
ParkAveFlasher's picture

Debt is wealth.  Black is white.  Pizza is a vegetable. 

Arius's picture

i like to pizza part ... can eat it forever and ever breakfast, lunch and dinner ... healthy food all it takes in advertisement right??? an idea for the Cain "pizza" El Presidente.

i suppose... at least i hope ...

FL_Conservative's picture

How do you say, "when piigs fly" in spanish?

kaiserhoff's picture

And how is this different from the unicorn farts and creative accounting they have been using for capital?



wenn Schweine fliegen - Kraut

quando los cerdos vuelan - Spanish, more or less;)


Poetic injustice's picture

Because now creative accounting is one thing and has it's limits, this is pure fraud.
I mean, I also want to turn my taxes I plan to pay for next year, turn them into assets and use to buy whatever I like.

whotookmyalias's picture

It's called a tax refund loan, but you have to pay it back, not write it down, take a tax credit, then use it to borrow more money next year.  if you could, I'd be all over that.  :)

Poetic injustice's picture

I will pay it back, of course. 1 dollar/year should be fair.

Tinky's picture

Actually, Pizza is vegetable doesn't belong, as it is a far more accurate and – ahem – palatable statement than the other two.

Arius's picture

i like your thinking :)

Cdad's picture this a Friday humor post?  This isn't really....I mean...ummmm...what now?  

Tortuga's picture

Pizza is a vegetable buddy, the ingredients are all plants! I put it right up there by the butterfinger food group, on the now retired food pyramid or is it hidden in page 2864 of Michell's new food group that is starving, starving the school children of the villages, I forget, my brain must be clogged up today after that, um good, tripple meat, double crust last nite.

machineh's picture

Haven't these unfortunate bankers suffered enough? /sarc

NoDebt's picture


Good to see Europeans are as adept at ignoring their own laws and regulations as we are.  There will be high-fives in Davos this year for sure over this one.

I can't believe they were ever considered an "asset."  Then Basel III says they can't be counted as an asset (makes sense to me).  Then the banks come in and ask the Spanish government to sprinkle them with magic pixie dust and.... TA DA!.... they're an asset again!

This is like watching a 3rd grader play checkers.  Every time they make a bad move, they just change the rules.

Apeman's picture

Kill them before they destroy even more of society.

Charles Nelson Reilly's picture

how much longer can these fuckers hold out until gold gets recognized as money for banks balance sheets?

Tortuga's picture

Gold is money for the banks balance sheets. Never has left the sheets. It's all the legal "paper" their political hores legislated that is keeping the scam going.

TrulyBelieving's picture

Never knew that Spanish banksters studied at Harvard.

VonSalza's picture

i can has debtburger

Racer's picture

They got the idea from Biden... 'have to spend money to save from going bankrupt'........


JJ McApe's picture

just multiply it by (-1) and everything is alright.

turns every debt into maximum gains.

over the next months: have fun bailing out spain. this pig is much harder to swallow than greece.

whotookmyalias's picture

Now I know why absoute value was so important during high school.  No need to multiply by -1, just put all your numbers like this |X| and it will balance just fine.

observer007's picture



First Video: Snowden in Moscow Statement:

MrBoompi's picture

I want to buy an office building in town here.  Since I need a loan to do it, I suppose I could now talk the bank into letting me claim the unpaid portion of my private mortgage is an asset.  I have a feeling this is really going to work out fantastic!

Poetic injustice's picture

It's creative thinking that is needed to save the world!

Don't forget to claim as asset your lottery tickets (each of them could potentially win millions!).

sbn's picture

Can I do the same with my trades?

Ban KKiller's picture

"I am using my past crimes to be used to forgive my future crimes as it becomes necessary", said EVERY FUCKING BANK. 

Racer's picture

"most forms of DTAs will no longer be allowed to count towards capital"

So have been counting losses as capital for a long time and they are moaning they can't do it after 2014?????????????

WTF, no wonder this is a f"cked up farce,

jldpc's picture

So much pious comment! Is there one among you who would not do the same to protect your privledged position in society, your job, your country club account, your children's BMW's, your wife's luxury villa, furniture, jewelry, hairdo's, fancy shoes? And what of the yacht? And the pedigreed dogs and horses? Cone on? So you have no morals, and representative democracy is a joke. So what is the big deal? It's you against me and mine, andwhy should I give up - ever - change the rules - so what? Move on?  

Tortuga's picture

I haven't, wouldn't, won't. Not pious or better than anybody else, just raised different.

mick_richfield's picture

I wouldn't.

I also wouldn't steal stuff from your garage, even if it were easy.

No, it is not you and yours against me and mine.  Life is not a zero-sum game.

dwayne elizando's picture

Anything is worth a try when you're on the verge of systemic collapse! Way to think outside of the box, convert a negative into a positive, so optimistic!

Will somebody hit the fucking panic button already!

Joebloinvestor's picture

So what is the problem with that?

GS sold worthless morgages as investment grade securities.

It is amazing that just by moving a worthless debt to a different column, it becomes an asset.

Forgiven's picture

LONG taxes on deferred derivatives losses baby!

Smegley Wanxalot's picture

So if I go into a bank to apply for a loan and list all my financial failures as assets, will the bank now look favorable upon me?  I thought this shit only works at Pedro's Used Car Autobonanzo!


BTW, that was hypothetical - I have no need nor intent to borrow money.  Ever.

Tortuga's picture

They have you right were they want. Finance everthing then pay back with worthless dollars, if you believe!

FieldingMellish's picture

They'll want their AAA towels back soon...

tmosley's picture

Wow, I had no idea that Spain was run by Mooninites.

In retrospect, it makes sense.

Yen Cross's picture

     Can I do that with my recent gold and silver loses? Crickets... At least I know my metal will appreciate in price. Spains deferred taxes will only increase as their POS assets vaporize in value.

ZeroPoint's picture

No debt left behind........

Mitch Comestein's picture

Being a CPA who is well versed on DTAs, it took me a minute to realize what they wanted.  But, then I read the article and realized it.  They want a % of ALL OF THERE LOSSES to be paid for by the state.  That is it.  They want the DTA to become a tax credit.  I assume a refundable one.  If it is not refundable then it would not make a difference from what they already have from a tax perspective. 

This means they want a bail out based on their tax losses!  I would guess that, if approved, 99.9999999% of the population will not understand what is happening.

firstdivision's picture

Next up, Spain wants to use all assets marked as SQRT(-1) as capital...oh wait that is already a reality here in the USSA.