spanish banks in better shape for 2010
News Posted On: 13 October 2009
Spain does not see any need to buy assets from banks in 2010, Economy Minister Elena Salgado said on Tuesday.
"In 2010 it will not be necessary to acquire financial assets. The government spent 30 billion euros on this in 2009 but this will not have to continue in 2010," Salgado said while presenting Spain's draft 2010 budget to parliament.
However, analysts pointed out that the lack of need for government financing is more due to an improvement in credit markets than to any greater solidity of the Spanish system.
'This does not mean that institutions will not need to improve their capital ratios, but that they will be able to do this by tapping the markets for cash,' Spanish brokerage Renta 4's Nuria Alvarez said.
It is however likely to be a different story in Spain's fragmented savings banking system. Some of the smaller banks are likely to face continued difficulties in the short term.
This news is not saying that the credit restrictions in place in Spain at the moment are going to suddenly loosen in 2010. That said: Spain's banking system was not as exposed to global toxic debt as some banks in the UK and US were.
None the less there have been thousands of repossessions in Spain, and these bad debts will mean Spanish banks on a mission to repair their balance sheets for some time. They will do this with restrictive lending policies.
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