• Tag Archives Spain
  • Italian Taxpayers To Foot 17 Billion Bill As Rome Bails Out Another Two Insolvent Banks

    Two weeks after the first, and biggest, European bank bail-in took place under the relatively new European bank resolution mechanism, the EBRD, when Spain’s Banco Popular wiped out the holders of its most risky securities, including equity and AT bonds, and then selling what was left of the bank to Santander for 1 – a process that took place without a glitch – Italy may have just killed any hope of a European banking union, when the bailout of two small banks made a “mockery” of Europe’s new regulation.
    Late on Sunday, Italy passed a decree that will effectively sell the good part of the two banks to Intesa, Italy’s second-largest and best-capitalized bank. Intesa said last week that it would be willing to buy the best assets for a token price of 1 as long as the government assumed responsibility for liquidating the banks’ large portfolio of sour loans. As a result, Italy said it would commit as much as 17 billion in taxpayer funds to clean up the two failed “Veneto” banks in one of Italy’s wealthiest regions and support the takeover of their good assets by Intesa Sanpaolo SpA for a token amount. After an emergency cabinet meeting on Sunday, Finance Minister Pier Carlo Padoan said the Italian government will provide Milan-based Intesa with about 5.2 billion euros to allow it to take on Banca Popolare di Vicenza SpA and Veneto Banca SpA assets without hurting capital ratios, The European Commission, in a separate statement, said it approved the plan for the two banks and that it is in-line with state-aid rules.
    Unlike the Banco Popular bail-in by Santander, however, Intesa would only take on the good assets. PM Gentiloni said the lenders will be split into good and bad banks and that the firms, with taxpayers on the hook for the bad banks. The process was rushed to allow the failed banks to reopen on Monday and avoid a depositor panic and bank run. The intervention is necessary because depositors and savers were at risk, Gentiloni said. The northern region where they operate ‘is one of the most important for our economy, above all for small- and medium-size businesses.’

    This post was published at Zero Hedge on Jun 25, 2017.


  • Draghi Doesn’t See ‘Bubbles’ – Let Me Show You Some

    Mario Draghi has again missed an exceptional opportunity to adjust monetary policy. By ignoring the huge risks that are being created from the brutal inflation of financial assets, saying that ‘there are no signs of a bubble,’ the European Central Bank (ECB) remains adamantly focused on creating inflation by decree, denying the effects of technology, demography, and overcapacity.
    ‘No signs of bubble’? I’ll show you some of them myself.
    The percentage of debt of major countries ‘bought’ by the ECB: Germany, 17%, France 14%, Italy 12%, and Spain 16%. In all cases, in 2016 and 2015 the ECB was the largest buyer of said countries’ net emissions. Ask yourself a question: On the day the ECB stops buying, which of you would buy peripheral or European bonds at these prices? Clearly, the first sign of a bubble is the absence of demand in the secondary that offsets the impact of the ECB. It indicates that the current price is simply unacceptable in an open market, even if the recovery is confirmed, especially because rates do not even reflect a minimum real return, being below inflation.

    This post was published at Ludwig von Mises Institute on June 24, 2017.


  • German Politicians Hammer the ECB, But Only to Get Votes

    They know: the Eurozone would plunge into a sovereign debt crisis all over again, only worse this time.
    By Don Quijones, Spain & Mexico, editor at WOLF STREET. These days it’s easy to tell when general elections are approaching in Germany: members of the ruling government begin bewailing, in perfect unison, the ECB’s ultra-loose monetary policy. Leading the charge this time was Finance Minister Wolfgang Schaeuble, who on Tuesday urged the ECB to change its policy ‘in a timely manner’, warning that very low interest rates had caused problems in ‘some parts of the world.’
    Werner Bahlsen, the head of the economic council of Merkel’s CDU conservatives, was next to take the baton. ‘The ongoing purchase of government bonds has already cost the European project a great deal of credibility and has damaged it,’ he said. ‘The ECB can only regain trust with the return to a sound monetary policy.’
    As Schaeuble and Balhsen well know, that is not likely to occur any time soon. Indeed, like all other Eurozone finance ministers, Schaeuble is benefiting handsomely from the record-low borrowing costs made possible by the ECB’s negative interest rate policy. But by attacking ECB policy he and his peers can make it seem that they take voters’ concerns about low interest rates seriously, while knowing perfectly well that the things they say have very little effect on what the ECB actually does.

    This post was published at Wolf Street on Jun 18, 2017.


  • Fear of Contagion Feeds the Italian Banking Crisis

    At first, deny, deny, deny. Then taxpayers get to bail out bondholders.
    By Don Quijones, Spain & Mexico, editor at WOLF STREET.
    Spain’s Banco Popular had the dubious honor of being the first financial institution to be resolved under the EU’s Bank Recovery and Resolution Directive, passed in January 2016. As a result, shareholders and subordinate bondholders were ‘bailed in’ before the bank was sold to Santander for the princely sum of one euro.
    At first the operation was proclaimed a roaring success. As European banking crises go, this was an orderly one, reported The Economist. Taxpayers were not left on the hook, as long as you ignore the 5 billion of deferred tax credits Santander obtained from the operation. Depositors and senior bondholders were spared any of the fallout.
    But it may not last for long, for the chances of a similar approach being adopted to Italy’s banking crisis appear to be razor slim. The ECB has already awarded Italy’s Monte dei Paschi di Siena (MPS) a last-minute reprieve, on the grounds that while it did not pass certain parts of the ECB’s last stress test, the bank is perfectly solvent, albeit with serious liquidity problems.

    This post was published at Wolf Street by Don Quijones ‘ Jun 16, 2017.


  • Federal & State Tax Receipts Are Declining Rapidly, Expect A Hard Landing- Episode 1304a

    The following video was published by X22Report on Jun 12, 2017
    Spain’s banking system continues to decline, the banking regulators are putting a freeze on short positions on banking stocks. Moody’s reports more retailers will be filing for bankruptcy, this is the retail apocalypse. Chain restaurants have been hit hard, people just don’t have the discretionary funds to go out to eat. The tech sector took a beating which is not a very good sign on how the market it doing. Federal and state tax receipts implode and we are reaching the crisis point back in 2008-2009. The government is now spending more than it is taking in. The global credit impulse is negative and slipped even further, the credit growth in the US is locking up, as the Fed raises rates into a weakened economy it will set off a chain reaction scenario where the entire economy will implode on itself.


  • The Next Financial Crisis Has Already Arrived In Europe, And People Are Starting To Freak Out

    Did you know that the sixth largest bank in Spain failed in spectacular fashion just a few days ago? Many are comparing the sudden implosion of Banco Popular to the collapse of Lehman Brothers in 2008, and EU regulators hastily arranged a sale of the failed bank to Santander in order to avoid a full scale financial panic. Sadly, most Americans have no idea that a new financial crisis is starting to play out over in Europe, because most Americans only care about what is going on in America. But we should be paying attention, because the EU is the second largest economy on the entire planet, and the euro is the second most used currency on the entire planet. The U. S. financial system is already teetering on the brink of disaster, and this new financial crisis in Europe could turn out to be enough to push us over the edge.
    If EU regulators had not arranged a ‘forced sale’ of Banco Popular to Santander, we would probably be witnessing panic on a scale that we haven’t seen since 2008 in Europe right about now. The following comes from the Telegraph…
    Spanish banking giant Santander has stepped in to the rescue ailing rival Banco Popular by taking over the failing lender for 1 in a watershed deal masterminded by EU regulators to avoid a damaging collapse.
    Santander will tap its shareholders for 7bn in a rights issue to raise the capital needed to shore-up Popular’s finances in a dramatic private sector rescue of Spain’s sixth-largest lender.
    It will inflict losses of approximately 3.3bn on bond investors and shareholders but crucially will avoid a taxpayer bailout.

    This post was published at The Economic Collapse Blog on June 12th, 2017.


  • You Know It’s Bad In Spain’s Banking System When…

    …The regulator bans short sales.
    Following our discussion of the collapse of LiberBank’s stock and bond prices as investors quickly identify the next domino to fall in Spain’s crumbling financial system, Bloomberg reports regulators imposed an emergency ban on short selling the stock.
    Spanish securities regulator CNMV, backed by the European Securities and Markets Authority, on Monday banned the sale of borrowed shares for a month.
    ‘Market confidence has deteriorated in relation to a part of the local banking sector,’ ESMA said, citing CNMV.

    This post was published at Zero Hedge on Jun 12, 2017.


  • Is Another Spanish Bank about to Bite the Dust?

    Stockholders and junior bondholders fear a ‘bail-in.’
    After its most tumultuous week since the bailout days of 2012, Spain’s banking system is gripped by a climate of fear, uncertainty and distrust. Rather than allaying investor nerves, the shotgun bail-in and sale of Banco Popular to Santander on Tuesday has merely intensified them. For the first time since the Global Financial Crisis, shareholders and subordinate bondholders of a failing Spanish bank were not bailed out by taxpayers; they took risks in order to make a buck, and they bore the consequences. That’s how it should be. But bank investors don’t like not getting bailed out.
    Now they’re worrying it could happen again. As Popular’s final days showed, once confidence and trust in a bank vanishes, it’s almost impossible to restore them. The fear has now spread to Spain’s eighth largest lender, Liberbank, a mini-Bankia that was spawned in 2011 from the forced marriage of three failed cajas (savings banks), Cajastur, Caja de Extremadura and Caja Cantabria.

    This post was published at Wolf Street by Don Quijones ‘ Jun 10, 2017.


  • Bank Stocks Have a Completely New Risk

    Spain’s Banco Santander is paying 1 to take over troubled rival Banco Popular, in a deal that illustrates Europe’s new system to rescue failing banks without burdening taxpayers or stressing markets. This is being cheered around the world because the shareholders lost absolutely everything. The bank which was valued in the collapse at 1.6 billion was bought for 1. Forbes wrote:
    ‘This is an excellent example of how the resolution of troubled banks should be done. The shareholders who employed the management which caused the problem lose all their money. The depositors, who were and are not responsible for the bank’s troubles, are protected. And we don’t end up with some great smouldering hole in the financial landscape where Popular used to be, we get new capital raised instead. Further, no taxpayer has been harmed in this operation.’

    This post was published at Armstrong Economics on Jun 9, 2017.


  • ‘Bail-In’ Era for Europe’s Banking Crisis Begins

    Many Banco Popular investors wiped out. Taxpayers off the hook. What it means for Italy. Banco Popular, until today Spain’s sixth biggest bank, is no more. Its assets, including a massive portfolio of small-business clients, now belong to Banco Santander, Spain’s biggest bank. The global giant now has 17 million customers in Spain, a country of just 45 million people. The price was 1.
    Spain’s Ministry of the Economy revealed that by 3 pm Tuesday, Popular was no longer able to contain the deposit outflow. ‘It had exhausted all its lines of liquidity, both ordinary and extraordinary.’ It had run out of collateral to cover any further lines of emergency liquidity.
    This apparently triggered the intervention by the ECB’s Single Resolution Board (SRB), which decided on Tuesday that the bank ‘was failing or likely to fail’ and would have to be wound down, unless a buyer could be found.

    This post was published at Wolf Street on Jun 7, 2017.


  • JUNE 7 B/GOLD AND SILVER HELD IN CHECK BY THE BANKERS: GOLD DOWN $4.30 AND SILVER DOWN 9 CENTS BUT THEN THEY WERE WHACKED IN THE ACCESS MARKET/FOR THE 4TH CONSECUTIVE DAY THE AMOUNT OF SILVER STA…

    GOLD: $1290.10 down $4.30
    Silver: $17.58 down 9 cent(s)
    Closing access prices:
    Gold $1294.30
    silver: $17.68
    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
    SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $1297.97 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: 1290.60
    PREMIUM FIRST FIX: $5.37
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    SECOND SHANGHAI GOLD FIX: $1298.88
    NY GOLD PRICE AT THE EXACT SAME TIME: 1291.75
    Premium of Shanghai 2nd fix/NY:$7.13
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    LONDON FIRST GOLD FIX: 5:30 am est $1292.79
    NY PRICING AT THE EXACT SAME TIME: $1293.10
    LONDON SECOND GOLD FIX 10 AM: $1291.00
    NY PRICING AT THE EXACT SAME TIME. $1291.25
    For comex gold:
    JUNE/
    NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 121 NOTICE(S) FOR 12100 OZ.
    TOTAL NOTICES SO FAR: 2048 FOR 204800 OZ (6.3701 TONNES)
    For silver:
    For silver: JUNE
    4 NOTICES FILED TODAY FOR 20,000 OZ/
    Total number of notices filed so far this month: 490 for 3,450,000 oz

    This post was published at Harvey Organ Blog on June 7, 2017.


  • We Just Had A Bank Bail-In, Anyone Paying Attention – Episode 1300a

    The following video was published by X22Report on Jun 7, 2017
    Retail sales are down in the UK, inflation rising and spending is down. Sears is closing another 66 stores and the retail apocalypse take hold. Older Americans need to work because of zero interest rates, inflation and the devaluation of the dollar, by doing this the younger generation is finding it hard to find those part-time jobs. The stock market is repeating what we saw back in 2000 and 2006, and we know how that ended, in a crash of the market and a recession. Spain’s Banco Popular just did a bail-in and it was purchased by Santander. China signaled they were going to purchase Treasuries and this might have been agreement that Trump made during the meeting with Xi Jin Ping.


  • CoCo Loco! Spain’s Banco Popular Plunges, Suspended By Regulator and Sold To Banco Santander For 1 Euro

    Spanish bank, Banco Popular, has been declining in price for some time thanks to plunging earnings.
    Banco Popular’s bad loans totaled 35.7 billion euros ($38 billion) at 4Q, not a good sign. Flagging earnings and $38 billion in bad debt has resulted in declining stock prices and trading suspended by their regulator.
    And The Single Resolution Board agreed to the sale of Banco Popular for One Euro to Banco Santander. But even at One Euro, Banco Santander is not seeing any ‘bargain surge.’

    This post was published at Wall Street Examiner on June 7, 2017.


  • What Europe’s First Official Bail-In Looks Like

    “If you think this has a happy ending, you haven’t been paying attention,” warns MINT Partners’ Head of Capital Markets Bill Blain, as he reflects on what just happened in Europe (that US equities seem happy to brush off as yet another fleshwound to global instability).
    There is a rule in Financial Institutions that any bank that calls itself ‘popular’ generally isn’t. This was proved last night. But, congratulations if you were a holder of Spain’s Banco Popular’s Senior Debt – they did a Zebedee ‘boing!’ on the basis last night’s last minute Santander rescue makes the bonds money good.
    Bad news for the Equity and COCO AT1 holders – who have the distinction of holding the first major bank capital bonds to be bailed-in/wiped out under EU regulations. Banco Popular senior debt is 12 points higher this morning.
    The AT1 perps are trading at 2.6%, down 50 points!!, and even that price looks optimistic. Ahah. We’ve not seen crashes like that since 2008.
    Popular has been desperately seeking a rescue for the last few weeks, but everyone looked the other way. So last night the ECB triggered the ‘Single Resolution Mechanism’ when it determined the Popular’s liquidity crisis was such its equity would be unable to cover debts or other liabilities.

    This post was published at Zero Hedge on Jun 7, 2017.


  • Spanish Banking Crisis Spreads As Banco Popular Credit Curve Inverts

    Having told its employees “don’t panic” over the weekend (at the crashing stock and bond prices of Spain’s 6th largest bank), it appears investors are ignoring that message as Banco Popular’s credit curve has inverted for the first time since 2012 in the biggest red flag yet that Spain’s banking crisis is systemic and about to test the EU’s bail-in laws.
    Banco Popular Chairman Emilio Saracho sent a letter to staff assuring them the bank remains solvent after Friday’s stock crash, courtesy of Expansion, google translated:
    “From the management we are aware that the information that is being published affects the work and the spirit of each one of you, but our obligation as professionals is to focus on the day to day and on the clients, since the activity of the bank must continue as it has so far” begins the statement, whose target is the Professional Association of Directors Banco Popular.
    The central message of this letter sent yesterday is the following: “Banco Popular remains solvent and has positive net worth”.
    “Our bank is in a difficult situation,” says Saracho. “For this reason and in order to meet the regulatory requirements that the European Central Bank demands for next year and guarantee our strength and future, we are working on different alternatives.

    This post was published at Zero Hedge on Jun 5, 2017.


  • Qatar Crashes In Escalating Gulf Crisis; Oil Fails To Rebound As Global Stocks Dip

    S&P futures point to a slightly lower open ahead of today’s US non-mfg ISM and Service PMI data. European shares fall, while Asian shares are little changed. Several European countries, including Germany, are closed for Whit Monday leading to subdued trading. Crude futures have reversed overnight gains following the latest unexpected Gulf Crisis overnight, in which Gulf nations cut all diplomatic relations with Qatar amid striking allegations of funding terrorism, as reported overnight.
    ***
    Looking at other asset classes, the AUD/USD continues grinding higher after a stronger than expected Chinese services PMI and inventories data reduces chances of negative GDP print, iron ore futures +2.0%; GBP/USD fills gap to Friday close, after opening lower in Asia following Saturday’s attacks Bloomberg observes. European equity markets lower from the open, oil-related stocks underperform given heightened political uncertainty. Banco Popular in Spain trades -11% after reports of liquidity pressure due to deposit withdrawals. Core fixed income markets edge lower, German long-end steepens, some focus on wage pressures within PMI data. MXN leads EMFX higher as ruling party is projected to win state election.

    This post was published at Zero Hedge on Jun 5, 2017.


  • Shock Waves Spread from Spain’s New Banking Crisis

    Has the time finally come to test the EU’s bail-in law? ****
    The shares of Spain’s sixth biggest bank, Banco Popular, plunged 36% this week to 0.43, reducing the bank’s market capitalization to 1.7 billion. Just three weeks ago, when there was still a glimmer of hope that things could be turned around, it was worth almost double that. Its shares traded at 15 ten years ago, before the collapse of Spain’s mind-boggling housing bubble that left Popular holding billions of euros of real estate assets.
    Popular may not be a systemically important institution, but it’s nonetheless an institution of great import. It has the largest portfolio of small business customers in Spain and enjoys the patronage of one of Spain’s most influential institutions, Opus Dei. Its well-heeled members are among the bank’s most important shareholders and investors, and they stand to lose a lot of money if a last-minute buyer is not found soon.
    This is an outcome that can no longer be discounted, especially after reports emerged on Thursday that senior officials of the ECB’s regulatory arm, the Single Supervisory Mechanism, had warned the bank could be wound down if it fails to find a buyer. But the EU agency charged with overseeing bank failures later issued a statement saying it ‘never issues warnings about banks.’

    This post was published at Wolf Street on Jun 3, 2017.


  • ABOUT JUNE 2/HORRENDOUS JOBS REPORT SENDS GOLD AND SILVER MUCH HIGHER/GOLD SHARES HOWEVER MUCH SUBDUED/TWO BANKING CRISIS MOMENTS TODAY: ONE FROM ITALY AND ONE FROM SPAIN/GYMBOREE IN THE USA READ…

    GOLD: $1276.20 up $9.80
    Silver: $17.49 up 25 cent(s)
    Closing access prices:
    Gold $1279.00
    silver: $17.57
    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
    SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $127073 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: 1262.90
    PREMIUM FIRST FIX: $7.83

    This post was published at Harvey Organ Blog on June 2, 2017.


  • Spain’s Sixth Largest Bank Crashes Most In 28 Years On Liquidation Fears

    Even as attention has turned once again to Italy as the next possible source of European financial contagion, Spain’s sixth largest bank has found itself in freefall over the past few days as concerns grow that the bank may be liquidated unless a last-minute buyer, or source of capital, emerges. In addition to the shares of Banco Popular crashing as much as 27%, the biggest intraday drop since 1989, its perpetual bonds have likewise been in freefall mode as investors liquidate securities which “they do not want to hold going into the weekend”, according to Ignacio Cantos, of ATL Capital in Madrid, quoted by Bloomberg.

    This post was published at Zero Hedge on Jun 2, 2017.