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As Europhoria Fades, Spanish Banks May Need Whopping €150 Billion In Loan Loss Provisions
With all the europhoria over Greece, some may have forgotten Spain. It is time to remind them that the real "fulcrum country" of Europe has now shifted a few thousand kilometers to the West, where as also reported on Friday the pain will come primarily from more home price declines (up to another 25% lower from here), and loan loss recognitions. How much? As Market News reports, the number may be as large as €150 billion. Of course, if that full number flows through the insolvent banking sector's bottom line, and forces a comparable FROB capital infusion via any of the bailout channels, this is €50 billion more in bond subordination (because good luck raising the capital via equity) than even the worst case Spanish bailout scenario had anticipated. It also explains why as of this morning, Spanish bonds traded at all time record lows. Because, sadly, nothing continues to be fixed in Greece, Spain, or anywhere else in Europe.
From Market News:
An independent auditors' report to be published later this week on the financial needs of the Spanish banking system will show that as much as E150 billion in additional loan loss provisions may be required, Spanish business daily El Confidencial reported Monday.
The provisioning estimates contained in the anxiously awaited report, commissioned by the Spanish government and conducted by private consultants Oliver Wyman y Roland Berger, will be higher than previously estimated because their calculations now include large provision figures for the retail mortgage sector, the newspaper said, citing sources at various banks.
The E150 billion in required loan loss reserves is not to be compared directly with the E100 billion of recapitalization aid offered to Spain earlier this month by its Eurozone partners. However, the strong increase in required loss provisions will raise the capital need to be estimated by the consultants, El Confidencial said.
It said the capital requirement for Spanish banks -- after reserves and profits are consumed -- could be "amply superior to E60 billion," though it did not purport to be citing from the auditors' report.
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But they said everything was fine damnit. When did the government ever lie?
when didn't it? :)
Is it just me, or is 150 billion just not all that much “whopping” anymore?
It sure seems more like a bottle rocket than a bazooka in central bank terms.
With the word like trillion thrown around as if it was nothing, billion is now the old million. Eventually hundred trillion is the word
Like being told someone spent ONE THOUSAND DOLLARS IN RENT. Try finding a place that doesn't charge that anymore. Billion is impressive if there was anything behind it, but since it's all monopoly money, who cares. The powers that be can push a button and make it happen now.
Spain's economy is roughly the same size as that of California, who is just about as bankrupt as Spain is. When you think of it in those terms, $150 Billion is probably not enough.
It never will be enough. That's the point.
just a little rounding error of 150%... happens to everybody!
Bank run will accelerate this week.
Not just in Europe...the US and Canada as well. Lots of weird news about monitoring airports, cellphones, etc in the news this week that most people aren't taking kindly to.
Gold and silver are very resistant to anything, silver holding that 29 dollar line with fractions being added and taken away by the hour, gold same position. Oil is doing something weird now, it's starting to behave like Gold and Silver did in 2009. It's starting to move against all currency classes, weak as a kitten though, but if Oil is becoming a full fledged currency we are all in big trouble.
"It was as if billions of Euroz suddenly cried out and were silenced!" Where are they all going??
Europeans are no longer passive "consumers", they are collaboraters to create and share, breaking and challencing old rules, patent laws ignored, copy right is now copy left, art, music, skills and knowledge to be shared freely.
Well, the sell side longs in control with their rumor heavy MSM shills can now cover after their crooked horseshit short squeeze. It's now down we go.
These few assholes controlling the "market" can go fuck themselves.
Hey I resent that! :)
Actually part of the bet was that if Thurs and Fri were short covering and QE speculation, that today would see people putting shorts back on. The real watershed will be after no QE on June 20. An all clear to short the markets till the end of summer.
Then we get a crazy pre-election rally as we realize how nice it will be not to have Commrade O in charge and a temp fix to fiscal cliff. Then next summer we start worrying about Europe again and realize Mitts job to fix everything the commies broke is going to be tougher then Regan's job of cleaning up after Carter.
So, one side of the Greek voting bloc wants to avoid swallowing the necessary pill that would put the onus of paying for public sector largess squarely onto the shoulders of those responsible and more to the point, onto the selfsame receipents of it. Who gets to pay for them avoiding their medicine? Their opponents, the private sector and savers and their children.
Ah, democracy, it's the freedom you get when you don't have liberty.
"meanwhile nothing is fixed in Greece, Spain, or anywhere else in Europe" or the rest of the planet!
There. Fixed it for ya!
Perhaps the Beastie Boys can explain
She's crafty - she's gets around
She's crafty - she's always down
She's crafty - she's got a gripe
She's crafty - and she's just my type
She's crafty
The Spanish situation is very similar to the Greek, but some 10 times larger.
The debt GDP ratio of the Spanish economy as a whole is of 350-400%.
The Spanish bank assets reach 3.6 billion euros. How many of these assets are healthy?
The assets of the Spanish banking giant is like a Swiss cheese with large holes in its volume, of such size that it is impossible to rescue the Spanish banking sector as a whole.
To date, has injected about 135 billion, but the famous rescue of 100 billion, within 4 months there will be to inject another 200 billion and still counting.
http://agstock.blogspot.com.es/
Greece is like a small ship swept out to sea in a hurricane. Nobody gives a shit while the eye of the hurricane approaches land.
Spain...then Italy...then France....oh my.
coming to a sovereign near you.
And to think we are all going through this shit because a few idiots will not admit to the size of the problem and the futility of their solution and are not willing to tell their invisible masters to take a write off on their fake wealth which has tethered humanity to a whipping post.
As a result we are seeing illogical movements in stock markets, bond prices and gold prices.
Reality however haunts us with troublesome unemployment rates which continue to expose the lie of recovery.
Patience and all will be revealed..
Weren't we told a few weeks ago by minister de Guindos that some 30 bn will be enough?! That guy should be fired right away.
By the way, Spanish banks and cajas have sold a lot of junior debt disguised as saving products to small retail investors (read voters). How are they going to restructure anything without touching those?
trust me spain has LOTS of money