{"id":32223,"date":"2018-03-12T07:58:53","date_gmt":"2018-03-12T12:58:53","guid":{"rendered":"http:\/\/olduvai.ca\/?p=32223"},"modified":"2018-03-12T07:58:53","modified_gmt":"2018-03-12T12:58:53","slug":"toxic-debt-still-plagues-spanish-banks-and-taxpayers-will-end-up-paying-for-it","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=32223","title":{"rendered":"Toxic Debt Still Plagues Spanish Banks (and Taxpayers Will End Up Paying for It)"},"content":{"rendered":"
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Toxic Debt Still Plagues Spanish Banks (and Taxpayers Will End Up Paying for It)<\/a><\/h3>\n<\/header>\n
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Years after Crisis Was \u201cSolved.\u201d<\/strong><\/p>\n

Europe\u2019s banking authorities are finally beginning to pile pressure on poorly performing banks to clean up their books, something that should have happened a long, long time ago. But as is often the case with European banking regulation, there\u2019s an elevated risk of unintended consequences.<\/p>\n

If a bank with a deeply compromised balance sheet is forced to report its loans that have gone bad \u2014 the hidden piles of toxic \u201cassets\u201d \u2014 at prices that reflect their real value (rather than the illusory prices the bank arrived at with its mark-to-model formula), that bank could suddenly find that its capital has gone up in smoke.<\/p>\n

This is more or less what happened with Banco Popular, the mid-sized Spanish bank that went under in June last year<\/a>. No matter how creative the rescue plans its management came up with \u2014 including spinning off a bad bank called \u201cSunrise\u201d \u2014 Popular simply couldn\u2019t find a viable way of disposing of its nonperforming loans without crippling its financial health.<\/p>\n

A similar thing appears to be happening with Spain\u2019s fifth largest bank, Banco Sabadell, the Spanish bank that has grown the most in relative terms since the crisis. It has more than doubled in size in the last ten years (from \u20ac78.7 billion in assets in 2008 to \u20ac173.2 billion in 2017), following the acquisitions of Banco Gallego, Banco Guipuzcoano, Caixa Pened\u00e8s, and the bankrupt savings bank Caja de Ahorros del Mediterr\u00e1neo (CAM).<\/p>\n

Now it has\u00a0immense difficulty ridding itself of the impaired assets it acquired when it took over CAM in 2012. But unlike Popular, Sabadell is getting a massive helping hand<\/a> from Spain\u2019s government.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Toxic Debt Still Plagues Spanish Banks (and Taxpayers Will End Up Paying for It) Years after Crisis Was \u201cSolved.\u201d Europe\u2019s banking authorities are finally beginning to pile pressure on poorly performing banks to clean up their books, something that should have happened a long, long time ago. But as is often the case with European […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,5660,279,281,284,743,10932,19247,4255],"class_list":["post-32223","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-don-quijones","tag-eu","tag-europe","tag-european-union","tag-spain","tag-spanish-banks","tag-toxic-debt","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/32223","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32223"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/32223\/revisions"}],"predecessor-version":[{"id":32224,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/32223\/revisions\/32224"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32223"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32223"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32223"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}