Spain is heading into very troubled waters....
Spain Delays and Prays That Zombies Repay Debt: Mortgages
http://www.bloomberg.com/news/2012-0...mortgages.htmlSpanish banks are masking their full exposure to soured property loans while they continue to prop up insolvent “zombie” developers, leading to credit-rating downgrades and plummeting share prices.
Spain is trying to clean up its banks, requiring lenders to set aside more for possible losses on loans deemed performing to developers like Metrovacesa SA (MVC), which hasn’t completed a project in more than a year and has none under way. While that represents about 30 billion euros ($38 billion) of increased provisions, it’s not enough because many of the loans said to be performing aren’t, said Mikel Echavarren, chairman of Irea, a Madrid-based finance company specializing in real estate.
“Spain has engaged in a policy of delay and pray,” Echavarren said in an interview. “The problem hasn’t been quantified by anyone because there is huge pressure not to tell the truth.”
The Economy Ministry says that Spanish banks have 184 billion euros of developers' loans and assets that are “problematic,” while the remaining 123 billion euros are performing. The need for more reserves to cover losses on the loans can’t be ruled out, Nomura International analysts Daragh Quinn and Duncan Farr said in a May 14 report. If Spain took losses on developer loans like Ireland did, Spanish banks would need 8.9 billion euros under the best case to 76.5 billion euros of additional provisions in the worst scenario, Nomura estimates.
Spain's Rajoy fights losing battle to stave off EU rescue
So where will he find the money to finance his €23.5bn bail-out of Bankia, a bank deemed healthy just weeks ago? The Fund for Orderly Bank Restructuring (FROB) has €5.3bn, and other banks to worry about. It would be ruinous to tap the bond markets. Spanish 10-year yields are already at danger levels of 6.4pc. The spread over German Bunds has reached a post-EMU high of 514 basis points.
Capital flight has cut foreign holdings of Spanish debt from 50pc to 37pc since January. Spain's banks -- including Bankia -- have been propping up the state with €316bn borrowed from the European Central Bank. Now the state is propping up banks. The incestuous nexus is surreal.http://www.telegraph.co.uk/finance/c...EU-rescue.htmlBarclays Capital says Spain's housing crash is only half way through. Home prices will have to fall another 20pc to clear an overhang of one million excess properties. That will bleed banks to death.
Spain's retail sales in record fall
http://www.bbc.co.uk/news/business-18246886Spanish retail sales dived in April, showing the biggest fall since the figures started being collected in 2003.
Sales fell 9.8% last month compared with the same month last year, after adjusting for calendar differences, according to official figures from the National Statistics Institute.
The fall was much worse than had been expected, and marked the 22nd consecutive month of declining sales.
Sales had fallen by 3.8% in March.
Without adjusting for calendar effects, retail sales fell 11.3% in April having dropped 4% in March.
It is the latest bad news from the Spanish economy, which saw the level of risk attached to its government bonds hitting record levels on Monday after it emerged on Friday that banking group Bankia was going to need a bigger bail-out than had been expected.
Spanish shoppers are being discouraged by government austerity measures, rising taxes and Europe's highest rate of unemployment.
Employment in the retail sector was down 1.2% in April from the same month in 2011.