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The banks will have a very, very big influence on how the market reacts going forward. Particularly in their appetite to continue supporting speculative developers. Spanish banks may now need to regroup and focus on low risk sectors, whilst steadily restructuring their own affairs.
In todays FT:
“Jean-Claude Trichet, president of the ECB, last week insisted the central bank had not been bailing out banks in Spain, but said there had been a marked increase in use of securitised bonds as collateral by Spanish banks and others.
The big difference is that European banks must re-raise this funding every week and the mortgage-backed bonds pledged at the ECB will have to find their way to the capital markets eventually, which many analysts say could mean markets such as Spain are potentially storing up problems for the future.”
See full article at: – http://www.ft.com/cms/s/0/64797fd2-d8eb-11dc-8b22-0000779fd2ac.html?nclick_check=1