[Anonymous]

http://online.wsj.com/article/SB10001424052970204319004577084443612729670.html

To quote Edward Hugh….

“The CAM deal is important and significant. In addition to the 5.25 billion euros supplied by the deposit guarantee scheme, the purchaser receives a guarantee for 80% of the losses incurred in the future on the property portfolio (also from the deposit guarantee scheme). Effectively this is a tax on the banking system in order to save the governments fiscal deficit. Many will welcome this, but those banks who are struggling already will only end up struggling more as a result of this deal.”

[logan]

Thanks for that link. The government were reported last week to be unsure if Sabadell had the actual funding to carry this off. Barclays, Santander and BBVA all pulled out after seeing CAM’s books.
Rajoy has plans to create a bad bank costing €100bn from the EFSF to buy up all Spanish banks none performing property portfolios. So I am not sure where this CAM deal fits into that. An 80% guarantee against future loss seems a tad reckless to me.
Anyway for investors such as myself in CAM it’s good news of a sort after such a long period of uncertainty.
Here is Sabadell’s press release: They were in fact the only bidder.
http://press.bancsabadell.com/2011/12/frob-allocates-cam-to-banco-sabadell.html

[Anonymous]

@logan wrote:

Anyway for investors such as myself in CAM it’s good news of a sort after such a long period of uncertainty.

Don’t tell me you bought some of CAM’s cuotas participativas back in 2008. I remember thinking they looked toxic.

[logan]

Doh! 🙁

[Anonymous]

I may be stupid but how is this a tax on the banking system? It’s a hidden handout to the buyer because it basicly removes 80% of the risk involved. The taxpayers and the few banks that have behaved are the ones loosing on a deal like this. Don’t meddle with the forces of the market… the whole fractional banking system is faulty and should be removed all together.

[logan]

I think Edward Hugh means eventually other banks will have to pay for the subsidy in other ways. Someone will have to pay for it and the government does not plan for it to be them.

[Author]

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