Rescue To The Banking Of Spain

Rescue to the Banking of Spain

Introduction

The choice of this issue is given by our deep interest in the Spanish financial system and the great involvement that the crisis has had on our country and our lives.

The Spanish banking system crisis was of such a magnitude that it had to resort to international aid. Expansive monetary policies, the abundance of liquidity that were accessible in the markets, with all this the financing cost was very low what led to indebtedness. The high dependence of Spanish companies that invested at a dizzying pace due to bank financing, the increase in bank branches with their corresponding template increases

But the most serious problem that credit entities faced was the deterioration of their credit portfolio, excessively concentrated in the real estate sector, they also had to manage a high volume of assets because of the incipient delinquency.

Developing

Real estate speculation has been the cause of the sinking of the sector. Not only for corruption cases involving promoters and municipalities. With the real estate boom initiated in early 2000, Spain became in 2001 in the first European country in housing in property, with just 15% of Spaniards in rental regime

According to government data, the ‘brick’ had a weight of 17.9% around 34% of GDP in early 2008.

Several months on the collapse of construction companies with billions of euros in debts.

The intervention in 1993 to Banesto was CajThe active population.

The figures are even greater if their indirect influence is taken into account in other sectors, which would mean any government ever seriously acted because such ‘bubble’ was always denied until the puncture was evident. Adjustment is the definition that the current executive maintained during early 2009, the first financial entity rescued on a large scale later wants to insist that the Spanish financial system remains solid, although it cannot be immune to the international financial crisis.

3 aids were granted, the first was an emergency injection of 1.1500 million 9.000 million that the Government made available, to keep the financial entity afloat. The second consisted of 1.300 million euros in preferential shares granted by the deposit guarantee fund and third 2.475 million per Cajasur that absorbed Caja Castilla-La Mancha, in addition to 350 million for bridge financing. The financing bridge is a type of loan that arises when there is an immediate need for financing. It is temporary, specifically until the final loan is obtained, as long as the debtor ensures a future income. In total, 5.275 million, of those who have not been returned or know if it will ever be returned because it is not established intervened with 800 million euros in fees in Cajasur so that it could meet the minimum solvency requirements, to avoid its bankruptcy.

The FROB created in 2009 a fundamental instrument in the bank restructuring process. It had two functions: managing the restructuring processes of credit entities in crisis and supporting certain credit entities fusion processes.

Third, there is the CAM (Mediterranean Savings Bank), an entity encouraged by the Government of the Valencian Community, Finance Macroprojects such as the City of Arts The Province of Alicante. Leaving a 5 hole.000 million euros.

The maximum point of the banking system crisis in Spain arrived with Bankia, an entity that emerged from the union of 7 savings banks, from its beginnings it gave problems having to be recapitized by 4.465 million euros.

On Friday, May 25, the results of the 2011 accounts were presented, revealing some losses of 2.979 million. On May 28, the bag closed with a loss of -2.11%, level that had not been registered since 2003 and the risk premium was fired reaching its historical maximum until the time of 511 basic points.

The government denied at a press conference that there were some kind of rescue for Spanish banking insisting that there was no relationship between the rise of the risk premium and the situation of Bankia. Finally, the Minister of Economy and Competitiveness appeared before the media and confirmed the request for financial assistance to the EU to recapitize the banking entities that require it and clean up the deteriorated financial system of the country.

The Eurogroup approved the Spanish government request made available a credit line of a maximum of 100.000 million euros. The IMF estimated that the bank required about 40.000 million euros to deal with the delicate economic situation.

Spain contributed a total of 64.098 million euros. From this, it has been possible to recover so far only 5.150 million

conclusion

In short, it can be said that the Spanish banking system has suffered a great transformation. At the decreased number of existing banking entities, and a second, would be the reduction of installed capacity. We are facing a smaller, more concentrated and more regulated Spanish financial system.