October 5, 2009 at 12:49 pm #55230
Interesting side angle on the question. It takes a look at BBVAs US numbers to draw its conclusions.
October 6, 2009 at 10:45 am #94463
October 7, 2009 at 7:02 pm #94498
“If BBVA is telling the truth in America then there is a reasonable chance they have a culture of truth telling. That would suggest that they are probably telling the truth in Spain.”
Wow! what a laughably niaive comment for a post so long on “facts” and numbers…
It could of course be that being “forced” to tell the truth in one region might make a bank more likely to lie elsewhere, where they feel they can get away with it..
October 7, 2009 at 7:09 pm #94499
I agree with your views lonegroover. Global balance gives a lot of opportunities to window dress.
October 15, 2009 at 2:40 pm #94638
According to a recent Eurozone survey, the Spanish are the most heavily indebted people with 49% having difficulty paying the interest on their mortgages and loans.
Now if they start defaulting in numbers the Spanish Banks are in deep poo, how much will this impact on other World banks? 😉
October 16, 2009 at 8:38 am #94644
If you go to any Spanish banks property web sites you will see the extent of their problems. CAM have hundreds of repos and offer 100% mortgages. Caja Madrid have over 8,000 properties across Spain.
Now common sense tells you they cannot carry such a burden for long. They borrowed on the international market to lend on. They have to service this debt from reserves since their mortgagees have defaulted.
I estimate many will go under soon and in my opinion that’s no bad thing. Spain has too many dodgy banks and clueless bankers.
October 16, 2009 at 11:07 am #94645
If I was in the market, that very fact would stop me buying at the moment. Until we know what will happen to the massive amount of outstanding debt on the million+ unsold properties, I don’t think we know to what depths the property market could plunge? The waiting for improvement time is not infinate and debts are rising all the time which will only make matters worse. When the propery overbuild situation/debt situation reaches a conclusion then I guess more will be clear, and confidence should come back?, but how long will that take and what will the result of the fallout be?
October 16, 2009 at 11:29 am #94647
“I estimate many will go under soon and in my opinion that’s no bad thing. Spain has too many dodgy banks and clueless bankers.”
Most Bankers in Spain are from middle class background like the rest of the world. The difference in Spain is that their degrees are not in the business discipline & they struggle ( Spanish businesses do not believe in training) They is no culture of courses, updating with changes such as business practises, legislation’s, products innovation to have the edge over competitors.
Most Spanish Bank managers have to have the right surname, and or belong to the Opus dei. Its this lack of training, poor middle & senior management, en efficient supervision that will be the problems for decades to come.
Most competent Spanish Bankers leave & join other banks around the world and the rest who cant leave for personal reasons just degerate.
October 16, 2009 at 11:30 am #94648
A real crude calculation, but if you say there are 1 million unsold properties and the construction cost are 100k per property. Then that is 100 Billion sitting as a loss so someone.
The loss, I expect to be higher as the new start figures for 2008 were around 800,000 properties (I think). So for the last 4 years there must have been around 2 million properties started/finished. A lot will have owners, but then there are probably a few hundred thousand of established property owners defaulting on their existing mortgages as unemployment accelerates.
It’s not looking good.
October 16, 2009 at 3:46 pm #94653
I agree completely with Shakeel’s view of Spanish bankers. In my former commercial life I met many and was often astonished by their basic ignorance of business practice and understanding of simple legal frameworks.
I was in a small Spanish coastal town the other day, fairly typical of it’s type and on two average adjoining streets I counted no less than 12 banks.
As these banks fail, for they surely soon must, I estimate 3 or 4 larger banks will survive and the financial scenery of Spain will be changed forever.
Repos will then be auctioned off by the banks creditors at the highest bid further depressing the market.
You would need your head examined to enter this market place now or in the coming 5 year term. If a property looks cheap now it will be expensive later on.
October 17, 2009 at 11:50 am #94664
That debt jp1 is assuming 1 million unsold properties which apparently is 1.623 million unsold and some believe it’s even higher.
When these Banks start to fold , this could start bringing other world Banks down, another potential credit crunch!
October 22, 2009 at 10:53 am #94769
Unfortunately Banks and bankers are now in the same position as estate agents. They talk up the market for that’s where their interests lie. Consequently they are ‘economical with the truth’. I have been astonished recently during my many contacts with banks that they seem not to have noticed Spain is in recession. They ask ludicrous prices for repossessed developments as if the sky had never fallen in.
I predict the place to buy in about a year will be property auctions when the banks desperately attempt to fend off inevitable insolvency.
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