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 | 3745537 ParkAveFlasher
ParkAveFlasher's picture

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

Fri, 07/12/2013 - 12:24 | 3745562 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 | 3745577 SpiceMustFlow
Fri, 07/12/2013 - 12:47 | 3745669 old naughty
old naughty's picture

Another ponzi is born!

Fri, 07/12/2013 - 13:09 | 3745788 FL_Conservative
FL_Conservative's picture

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

Fri, 07/12/2013 - 13:31 | 3745850 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 | 3745888 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 | 3746025 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 | 3746089 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 | 3745565 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 | 3745602 Arius
Arius's picture

i like your thinking :)

Fri, 07/12/2013 - 12:45 | 3745659 Cdad
Cdad's picture this a Friday humor post?  This isn't really....I mean...ummmm...what now?  

Fri, 07/12/2013 - 12:56 | 3745704 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 | 3746117 optionsman
optionsman's picture

WTF indeed

Fri, 07/12/2013 - 12:19 | 3745541 machineh
machineh's picture

Haven't these unfortunate bankers suffered enough? /sarc

Fri, 07/12/2013 - 12:26 | 3745543 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 | 3745607 pods
pods's picture

Calvinball FTW!


Fri, 07/12/2013 - 12:41 | 3745643 hedgeless_horseman
hedgeless_horseman's picture



Fri, 07/12/2013 - 12:40 | 3745640 dark pools of soros
dark pools of soros's picture

Kicking the can through a wormhole

Fri, 07/12/2013 - 12:19 | 3745547 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

bankruptcy bitchez!

Fri, 07/12/2013 - 12:58 | 3745725 Tortuga
Tortuga's picture

Not yet, they still have more pixie dust.

Fri, 07/12/2013 - 12:21 | 3745553 Apeman
Apeman's picture

Kill them before they destroy even more of society.

Fri, 07/12/2013 - 12:22 | 3745563 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 | 3745738 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 | 3745569 TrulyBelieving
TrulyBelieving's picture

Never knew that Spanish banksters studied at Harvard.

Fri, 07/12/2013 - 12:24 | 3745571 VonSalza
VonSalza's picture

i can has debtburger

Fri, 07/12/2013 - 12:25 | 3745581 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 | 3745582 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 | 3746035 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 | 3745594 observer007
observer007's picture



First Video: Snowden in Moscow Statement:

Fri, 07/12/2013 - 12:30 | 3745597 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 | 3745940 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 | 3745600 sbn
sbn's picture

Can I do the same with my trades?

Fri, 07/12/2013 - 12:32 | 3745603 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 | 3745615 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 | 3745617 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 | 3745748 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 | 3746085 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 | 3745634 WTFUD
WTFUD's picture


Fri, 07/12/2013 - 12:39 | 3745635 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 | 3745638 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 | 3745648 Forgiven
Forgiven's picture

LONG taxes on deferred derivatives losses baby!

Fri, 07/12/2013 - 12:46 | 3745651 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 | 3745755 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 | 3745735 FieldingMellish
FieldingMellish's picture

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

Fri, 07/12/2013 - 13:07 | 3745776 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 | 3745779 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 | 3745784 ZeroPoint
ZeroPoint's picture

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

Fri, 07/12/2013 - 13:28 | 3745859 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 | 3745861 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.

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