Reply To: Outlook for Spanish Banks?


@mark wrote:

We ain’t seen nothing yet.

Does anyone know how one can find out which Spanish banks are most at risk of insolvency? I don’t have the time or know-how to go through their published accounts, but someone, somewhere, must have done.

I think the problem is that nobody knows and we won’t know for certain until people actually default on their loans. They used to have an accurate model based on historical data but now they have lent to every Tom Dick and Harry so that model is broken.

In Spain it shouldn’t be as bad as in the States because:

The banks certainly dodged the US sub-prime debacle, thanks to restrictions by Bank of Spain on the use of off-books investment vehicles.

But although Spanish banks didn’t have the quantity of loans that they have in the States do they have a better or worse quality of loan? And even if they didn’t have these off-book investment vehicles did they buy any of the ones that American banks were selling?

Even the ECB won’t tell us, they just tell us how much they are lending to banks but not which banks they are lending to, as this might cause a run on those banks.

Banco Popular have an increase of 30% in non performing loans to the end of 2007 and Banesto have increased non performing loans which show a sharp increase in the first half of 2008, although still below the average.

And who is going to take a hit from the failure of Martinsa Fadesa?

@mark wrote:

I’m hoping there is a report online that ranks Spanish retail banks by riskiness. Any ideas?


Well, even the credit rating agencies made mistakes but they do seem to be a bit more thorough now that the horse has bolted but see this report

Nobody is admitting anything so how would anyone know?