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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.


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Fri, 07/12/2013 - 12:18 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

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

Fri, 07/12/2013 - 12:24 | Link to Comment Arius
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 ...

Fri, 07/12/2013 - 12:25 | Link to Comment SpiceMustFlow
Fri, 07/12/2013 - 12:47 | Link to Comment old naughty
old naughty's picture

Another ponzi is born!

Fri, 07/12/2013 - 13:09 | Link to Comment FL_Conservative
FL_Conservative's picture

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

Fri, 07/12/2013 - 13:31 | Link to Comment kaiserhoff
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;)


Fri, 07/12/2013 - 13:38 | Link to Comment Poetic injustice
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.

Fri, 07/12/2013 - 14:23 | Link to Comment whotookmyalias
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.  :)

Fri, 07/12/2013 - 14:40 | Link to Comment Poetic injustice
Poetic injustice's picture

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

Fri, 07/12/2013 - 12:23 | Link to Comment Tinky
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.

Fri, 07/12/2013 - 12:32 | Link to Comment Arius
Arius's picture

i like your thinking :)

Fri, 07/12/2013 - 12:45 | Link to Comment Cdad
Cdad's picture this a Friday humor post?  This isn't really....I mean...ummmm...what now?  

Fri, 07/12/2013 - 12:56 | Link to Comment Tortuga
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.

Fri, 07/12/2013 - 14:49 | Link to Comment optionsman
optionsman's picture

WTF indeed

Fri, 07/12/2013 - 12:19 | Link to Comment machineh
machineh's picture

Haven't these unfortunate bankers suffered enough? /sarc

Fri, 07/12/2013 - 12:26 | Link to Comment NoDebt
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.

Fri, 07/12/2013 - 12:33 | Link to Comment pods
pods's picture

Calvinball FTW!


Fri, 07/12/2013 - 12:41 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture



Fri, 07/12/2013 - 12:40 | Link to Comment dark pools of soros
dark pools of soros's picture

Kicking the can through a wormhole

Fri, 07/12/2013 - 12:19 | Link to Comment Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

bankruptcy bitchez!

Fri, 07/12/2013 - 12:58 | Link to Comment Tortuga
Tortuga's picture

Not yet, they still have more pixie dust.

Fri, 07/12/2013 - 12:21 | Link to Comment Apeman
Apeman's picture

Kill them before they destroy even more of society.

Fri, 07/12/2013 - 12:22 | Link to Comment Charles Nelson ...
Charles Nelson Reilly's picture

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

Fri, 07/12/2013 - 13:00 | Link to Comment Tortuga
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.

Fri, 07/12/2013 - 12:23 | Link to Comment TrulyBelieving
TrulyBelieving's picture

Never knew that Spanish banksters studied at Harvard.

Fri, 07/12/2013 - 12:24 | Link to Comment VonSalza
VonSalza's picture

i can has debtburger

Fri, 07/12/2013 - 12:25 | Link to Comment Racer
Racer's picture

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


Fri, 07/12/2013 - 12:26 | Link to Comment JJ McApe
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.

Fri, 07/12/2013 - 14:26 | Link to Comment whotookmyalias
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.

Fri, 07/12/2013 - 12:29 | Link to Comment observer007
observer007's picture



First Video: Snowden in Moscow Statement:

Fri, 07/12/2013 - 12:30 | Link to Comment MrBoompi
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!

Fri, 07/12/2013 - 13:52 | Link to Comment Poetic injustice
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!).

Fri, 07/12/2013 - 12:31 | Link to Comment sbn
sbn's picture

Can I do the same with my trades?

Fri, 07/12/2013 - 12:32 | Link to Comment Ban KKiller
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. 

Fri, 07/12/2013 - 12:35 | Link to Comment Racer
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,

Fri, 07/12/2013 - 12:36 | Link to Comment jldpc
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?  

Fri, 07/12/2013 - 13:02 | Link to Comment Tortuga
Tortuga's picture

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

Fri, 07/12/2013 - 14:39 | Link to Comment mick_richfield
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.

Fri, 07/12/2013 - 12:39 | Link to Comment WTFUD
WTFUD's picture


Fri, 07/12/2013 - 12:39 | Link to Comment dwayne elizando
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!

Fri, 07/12/2013 - 12:39 | Link to Comment Joebloinvestor
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.

Fri, 07/12/2013 - 12:42 | Link to Comment Forgiven
Forgiven's picture

LONG taxes on deferred derivatives losses baby!

Fri, 07/12/2013 - 12:46 | Link to Comment Smegley Wanxalot
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.

Fri, 07/12/2013 - 13:04 | Link to Comment Tortuga
Tortuga's picture

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

Fri, 07/12/2013 - 13:00 | Link to Comment FieldingMellish
FieldingMellish's picture

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

Fri, 07/12/2013 - 13:07 | Link to Comment tmosley
tmosley's picture

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

In retrospect, it makes sense.

Fri, 07/12/2013 - 13:08 | Link to Comment Yen Cross
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.

Fri, 07/12/2013 - 13:08 | Link to Comment ZeroPoint
ZeroPoint's picture

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

Fri, 07/12/2013 - 13:28 | Link to Comment Mitch Comestein
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.

Fri, 07/12/2013 - 13:30 | Link to Comment firstdivision
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.

Fri, 07/12/2013 - 13:43 | Link to Comment Save_America1st
Save_America1st's picture

What kinda crap is this, more lies?  I'm thinking they really don't wanna do that.  Maybe they would, but do they really care if they can't? 

They just want to "act" like they're trying real hard to come up with any kind of crazy plan to stay alive OTHER than ripping off all depositors by stealing 100% of their accounts.  Then when the gubment says "No" (the good cop/bad cop routine), the banks will just HAVE to Cyprus the shit out of every account they can lay their hands on.  Capital controls to ensue.  yadda yadda yadda.

Why anybody would leave any amount of their own fiat in a bank anywhere in the world is so fucking beyond me at this point.  I haven't left extra cash in my bank for over 4 years now!  Only what's needed to get by for the bills and that's fucking it...bare fucking minimum.  All payday fiat gets immediately extracted via ATM in piles of 20's as soon as it hits my account every 2 weeks.

Then most is immediately converted into nice shiny silver phyzz!

Keep stackin''s only gonna get worse before it ever gets even the slightest bit of better. 


Fri, 07/12/2013 - 13:43 | Link to Comment kchrisc
kchrisc's picture

Mark my words, governments will see this as a new taxing (theft) opportunity.

California will say, "hey, you have $1mil. in Federal tax losses, I'll take 10% fuck you very much." Feds will do the same.

I would bet that there already is a spread sheet somewhere in these Subjugated States estimating "revenue" from such a scheme.

Fri, 07/12/2013 - 13:52 | Link to Comment rosiescenario
rosiescenario's picture

The underlying assumption being that at some time in the future there would be profits made and subject to taxes which in turn could be offset by these losses......but what if there were never any profits?


What they should do is create a market in which companies can sell their losses to the highest bidder who is permitted to employ these losses as a tax offset. This would provide needed capital to the losers while simultaneously reducing the amount of cash going to governments, which is always a good thing....make a win / win out of a loser / loser.

Fri, 07/12/2013 - 14:49 | Link to Comment Peter K
Peter K's picture

I like the way you think, rosie:)

Less money to the state treasury is just what the doctor ordered for Spain. For all govies for that matter...:))))))

Fri, 07/12/2013 - 14:15 | Link to Comment pauhana
pauhana's picture

Jeez, I thought I read it wrong the first time.  So I took a deep breath and read it again.  Yup, that's what it really said - really.  Just trying to figure out how to do this at home. .  .  .  . 

Fri, 07/12/2013 - 14:23 | Link to Comment Slipstack
Slipstack's picture

We have gotten used to financial madness but this one actually made me laugh out loud.

Fri, 07/12/2013 - 14:47 | Link to Comment Peter K
Peter K's picture

You just know this isn't going to end well. :)

Fri, 07/12/2013 - 15:51 | Link to Comment W74
W74's picture

Hey these millions of American foreclosures aren't non-performing, they're ASSETS, durh.  As long as they're not sold at a loss all is well right???

Fri, 07/12/2013 - 16:34 | Link to Comment giggler123
giggler123's picture

The música is still playing so keep them butts off the sillas and continue hadas de la tierra

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