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Of the €208.2B in non-performing loans Spanish banks have refinanced (in order to avoid...

Of the €208.2B in non-performing loans Spanish banks have refinanced (in order to avoid recognizing them as NPLs), nearly half are treated as though they are not distressed, dubiously eliminating the need to take provisions against them, FT says. These banks have until September to reclassify restructured loans under tougher guidelines, a mandate that will likely necessitate fresh provisioning at some institutions. Between them, Santander (SAN), BBVA, and Caixabank (CAIXY.PK) had €76B in refinanced debt on their books at the end of last year.
Comments (19)
  • Ken Marinai
    , contributor
    Comments (44) | Send Message
     
    This article is 2 days old. SAN is up during that period.
    17 May 2013, 11:58 PM Reply Like
  • stocknerd
    , contributor
    Comments (1238) | Send Message
     
    I was in Spain for two months. Contrary to all the news about massive unemployment and austerity there is very little austerity to see. No mass unemployed on the streets begging for money. The shop are not closing in mass. Try finding a parking space on any city in Spain after 10 a.m. Gas is $8 a gallon and the streets are jammed. There are NO real estate deals. prices at restaurants are beyond high AND the portions are meager. The Spanish have an unique work ethos. Start work at 10 a.m. take a 2/3 hour lunch break at 12:30 and work to maybe 5,6 or 7. Ah the good life.
    18 May 2013, 01:59 AM Reply Like
  • 2ng
    , contributor
    Comments (84) | Send Message
     
    @stocknerd. I'm from Spain. When we talk about austerity here and massive unemployment it is not such a drama as an US citizen could probably imagine. Why? Simply because this is a very advanced welfare state system, very very different from the US way of life. Our state give to most of short term unemployed (less than 2 years after working 5 or so) a 1000USD or so wage, and for those who have been over 2 years unemployed of about 520USD (per person always, no matter how many per family). Old people have also public retirement pensions, which are between 500 and 2700 USD, being 500USD for those who have not worked on Their entire life. It's absolutly forbidden to work before you are 16, not even delivering newspapers, and between 16 and 18 you need your parents sign in a formal contract allowing you, which is extremely unusual. Best colleges are worth the same as the worst ones, about 1300 USD per year. Also, you don't have to pay directly for the health system. So, a person who has not done a single thing in his life could be living by rent in a small flat (the only people who rent a property here are students and really poor people), go on party twice a week, and have wathever health care possible for free (cancer...) with no time limit or any other.

     

    And now you might be thinking... how could they possibly have that way of living? Well, we have a 21% VAT, a 25% Society TAX, up to 52% personal rent tax, up to 52% tax for capital increases in less of a year term, a 50% fuel tax and so on... so the system basically stimulates you to do nothing.
    18 May 2013, 07:20 AM Reply Like
  • InvestoBullSG
    , contributor
    Comments (176) | Send Message
     
    The PIIGS are still flying in first half of Year 2013.
    18 May 2013, 07:13 AM Reply Like
  • 2ng
    , contributor
    Comments (84) | Send Message
     
    Flying PIIGS are always european, the US ones are way too obese for such an athletic activity. Gravity is a cruel mistress.
    18 May 2013, 07:39 AM Reply Like
  • Ben Learner
    , contributor
    Comments (211) | Send Message
     
    It is interesting that these news come at a time when Santander is being shorted by some hefty hedge funds across the pond.

     

    In addition, these news are persistently coming from Britain, whose banking system has had the largest injection of public money in the whole of the EU since 2008 and it is still in tatters.

     

    Germany has imposed stricter stress tests on the Spanish banking system, while at the same time excluding their own banks from the policing of the recently created single European monitoring authority.

     

    Finally, please feel free to visit Germany as I have done twice in the last year. You will see large airports in medium to small size cities such as Stuttgart (ask the cab drivers how much work they get), fancy trains that very very few people seem to use from airport to Dresden station and a heavily subsidized population taking minijobs while enjoying housing, health and schooling benefits. The estimated toxic debt of German banks -conveniently left out of the national debt- approaches €200000M.

     

    Certainly Spain has no reason for complacency. The real percentage of the unemployed population is probably one half of the published data, as there are still many people working and cashing in on unemplyment benefit, an ubiquitous problem across Europe that the current Spanish administration is certainly addressing.

     

    There should be a single standard to measure everyone by and patience to see the results of the structural reforms being carried out in Spain, whose economy has shown evidence in the past of firing up very quickly once money starts to circulate.
    18 May 2013, 09:14 AM Reply Like
  • VincentCh
    , contributor
    Comments (452) | Send Message
     
    The City has a hate relationship with Santander for several reasons:

     

    - Style:
    Santander has a conservative Spanish management. Its top management is in the same family spanning 5 generations. Compare that with City other players.

     

    - History with RBS:
    Santander had an alliance with RBS. It stopped when Santander bought in 2004 Abbey National. Then in 2007-2008, together with RBS and Fortis, they bought Abn Amro. In final, RBS is nationalized and Fortis does not exist anymore.
    SAN kept only Brazil (2000 branches, so doubled its size in the country), sold one Italian part to an Italian bank with a nice gain, exchanged another Italian part for growing SCF.
    Add the recent cancellation of 300 RBS branches transfer from RBS to SAN in the UK.

     

    - Acquisitions in 2008. SAN utilized the start of 2008 crisis to make acquisitions at discount prices in the US (75% of Sovereign bank) and UK (2 banks). They also entered Poland (initially buying from an Irish bank AIB)

     

    - Spanish crisis has objective root (the real estate crisis). But both the bank liquidity problems (tackled by the LTRO) and the sovereign extreme risk premium for Italy and Spain (tackled by the OMT) were market pushes.
    SAN being the biggest Spanish company, furthermore being a bank, putting it down would have been the signal for the vultures to start feasting in Spain and Latam.
    SAN was also the first company to use the dividend scripts. Now it is used by quite many IBEX companies. Its effects are underestimated: It allows companies to increase capital with making new shares issues at discount prices
    27 May 2013, 04:15 PM Reply Like
  • VincentCh
    , contributor
    Comments (452) | Send Message
     
    btw yet another one

     

    - History with Bank Of America
    SAN had an alliance with BAC. It stopped when SAN bought the 1st 25% of Sovereign. BAC had 25% of Santander Mexico shares. SAN bought these shares at discount in 2008. Then in 2012 they IPOed them with a nice profit.
    27 May 2013, 05:21 PM Reply Like
  • VincentCh
    , contributor
    Comments (452) | Send Message
     
    and also please understand

     

    SAN was also the first company to use the dividend scripts. Now it is used by quite many IBEX companies. Its effects are underestimated: It allows companies to increase capital with making new shares issues at discount prices

     

    as
    SAN was also the first company to use the dividend scripts. Now it is used by quite many IBEX companies. Its effects are underestimated: It allows companies to increase capital withOUT making new shares issues at discount prices
    27 May 2013, 06:33 PM Reply Like
  • 2ng
    , contributor
    Comments (84) | Send Message
     
    Well, Inditex and Santander are very similar in market cap
    27 May 2013, 07:02 PM Reply Like
  • Canard
    , contributor
    Comments (7) | Send Message
     
    I have enjoyed the SAN roller coaster ride, but didn't net much Perhaps I should've sold SAN "jumped off and stayed off" but I like the volatility, so I bought it back (after it went down even lower). Sounds like Spain could be a sorta nice place to "retire" particularly if you have a pension. I was impressed with the pickpockets there only a few years ago. They work in teams of three or more. The older 40'ish leader walked up 3 meters directly in front of me (Sunday morning) where I was seated (in full view of metro security camera) while awaiting the next train. He paused then nodded in my direction - I briefly wondered what that was about, soon the train arrived. I was still not concerned & I boarded the metro train car (with camera around neck & roller suitcase in hand) standing up. Before the train moved, (the doors not yet closed), I felt something tingling my right ankle, lucky that I didn't bend over, seems theives were after my billfold in my (left front) pants pocket. Within a few seconds I felt someone's hand in my pants pocket trying to grab my wallet. I couldn't recall "Bandito" so I growled the "M-F" phrase which apparently was understood by the rest of the (younger teen to 20 ish) pickpocket team since they quickly leaped out of that still motionless train car back onto the landing. Soon the doors closed and I was on my way to Villa Olympica shaken but still "whole". I tried to explain this event to a Guardia Civil a few blocks away but he didn't understand my poor attempt in broken Spanish.
    Other travelers have recounted how they have been strolling down (Barcelona) street, in daylight in a nice part of city whereby a total stranger will hand them their wallet (usually short a few notes), stating that they picked it up after owner had dropped it on sidewalk!
    These "professionals" rely on blending in & they may be immigrants seeking more than that minimum allowance.
    By comparison to US, I encountered no force or violence in this most personal heist attempt. I visited a flea-market & browsed their folding lock-back knives the next day, only to view their impressive collection of "Stilettos". Nobody wants any of that kinda bad stuff ! IMHO: US streets (or banks) aren't as physically safe as in Spain. Totally irrational !
    Conclusion: " A fool and his money soon part " or Adopt a more reserved Canadian style banking policy..... Bankers are supposed to be above all that kinda stuff !
    18 May 2013, 11:50 AM Reply Like
  • Ben Learner
    , contributor
    Comments (211) | Send Message
     
    Relieving fools of their superabundant cash through smart financial manipulations is a socially rewarding exercise. Delving into their pockets through thoroughly trained choreographies is punished with infamy and disgrace.
    18 May 2013, 12:31 PM Reply Like
  • Strike
    , contributor
    Comments (1069) | Send Message
     
    I feel Spain is on the way up. In fact I'm pretty sure it has hit bottom and have the same impression as Stocknerd, because I visit Spain 2-3 times a year and have noticed that the 'bargain' houses and apartments are becoming more and more difficult to find, the restaurants are crowded and the occasional demonstrations in no way reflect the reality or quality of life that Spaniards enjoy. It is no comparison with Greece which I also visited recently and which looks and feels totally depressed and distressed, with 1/3 of the shops shuttered, ugly graffiti everywhere and beggars who are extremely aggressive.

     

    Banco Santander is a steal. Botin has taken great pains to emphasize that the 2nd half of 2013 will see a dramatic rise in net profits as they get the rest of the bad loans off their books by June. Botin has an incredible reputation for honesty, so I really don't understand why few appear to believe him. I do and am now fully invested in BSD2 and enjoying the annual 10+ % dividend. I feel the risk lies in missing the lift-off to EUR 8 rather than experiencing another drop to EUR 5 or below.
    18 May 2013, 01:43 PM Reply Like
  • Ben Learner
    , contributor
    Comments (211) | Send Message
     
    It seems difficult for some people to understand and accept that fast wealth creation at all costs may not be what many Europeans want. That too is Democracy. This is also wealth:

     

    http://bit.ly/10EWyro
    18 May 2013, 02:48 PM Reply Like
  • joelkatz
    , contributor
    Comments (447) | Send Message
     
    Lets not get carried away, Spain is less than 26% of SAN business, this is a global bank, so why focus on Spain, either way Spain won't cause SAN too much Pain.
    19 May 2013, 07:38 PM Reply Like
  • VincentCh
    , contributor
    Comments (452) | Send Message
     
    I fear I disagree:
    In 2012, Spain was 50% of all group provisions (€9bi in Spain, €9bi in all other subsidiaries).

     

    As from 2013 Spain is an interesting country to follow because there are mostly positive news to come:
    - It is true that there is a deposit run in Spain: It goes from the nationalized banks to the sane banks mainly Santander. With liquidity in SAN Spain at 97%, this opens nice organic growth possibilities.
    - Beginning of the year, the BCE stopped the deposit war in the country. Its effects should start appear in Q2 2013.
    - Merge of Banesto and Banif in Santander Spain. Big cost cuttings to appear in coming years.
    - Crisis in Spain will not last forever, NPL will soon or later go down making Spain a cash cow.

     

    For 2013, there is one outstanding bad news to settle in Spain: The refinanced loans. However the size is way lower than the real estate crisis. (something like €1bi or 2 extra provisions)
    27 May 2013, 04:48 PM Reply Like
  • VincentCh
    , contributor
    Comments (452) | Send Message
     
    Related to this fuzzy (anglo-saxon source) report about refinanced loans in Spain, below is information found in the Spanish press (never saw pollution from own interest in these sources, about the opposite of the situation in anglo-saxon press)

     

    On April 30th Banco Central de Espana decided to normalize the handling of refinanced loans.
    The best information I have read about the subject comes from this article (in Spanish) http://bit.ly/16l07vY

     

    First some numbers.
    - The Spanish banks have €197bi refinanced loans, of which €82.4bi are classified as normal, €43bi as substandard (a Spanish specificity, triggers a 15% provision) and €70.4bi as non performing (with provisions in the 50% range)
    - Santander itself has €55.7bi refinanced loans (€22.2bi as normal, €15.3bi as substandard, €18.2bi as NPL). From these €55.7bi, €32.9bi are in Spain. The total provisions related to these €55.7bi is 17.39%

     

    The BC of Espana intends to clarify the rules the banks use to classify the refinanced loans and has given to the banks a Sep 30th deadline to assess the effects:
    - Per default refinanced loans are substandard (15% provisions)
    - They can be classified as performing in case there is no long no payment period, payments are under 50% of the revenues, exists new guarantees.
    - They must be classified as NPL in case it is (e.g) yet another refinancing without new guarantees.

     

    What will be the provisions impact on Santander?
    It depends on how the current Santander rules applies differ from these BCE rules.
    A upper limit can be computed as follows: BCE gave an estimation of €5bi to €10bi as additional provisions for all Spanish banks. Means €1.25bi to €2.5bi for Santander. It is a priori a higher limit, because a priori SAN has already strict provisioning rules.

     

    That sounds a big amount but Santander is a big bank with good efficiency allowing it to make huge provisions: It made in 2012, €18bi of provisions, of which €9bi in Spain (€6bi for the real estate).
    27 May 2013, 04:55 PM Reply Like
  • JMstocks75
    , contributor
    Comments (250) | Send Message
     
    its seems no one know s the truth about SAN, is a buy at 6.65 or is it going lower? Please feel free to chime in?
    20 Jun 2013, 07:30 PM Reply Like
  • joelkatz
    , contributor
    Comments (447) | Send Message
     
    definitely a Buy
    20 Jun 2013, 07:51 PM Reply Like
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