Four of Spain’s “cajas” submitted a merger proposal to the Spanish central bank. The combination would create Spain’s fifth-largest financial group, with assets of more than €135 billion ($167 billion). The Bank of Spain has been encouraging such mergers as it tries to shore up troubled lenders. “Many of them are half bankrupt,” Rafael Pampillon, head of economic analysis at IE Business School, said in reference to Spain’s regional savings banks. “They have loans to property developers and mortgages that have turned toxic, and by mixing them with other savings banks the risk is diluted.”
Stress in Spain’s banking system signals an increasing risk that European governments may struggle to control fallout from the Greek debt crisis, said Mohamed A. El-Erian, co-chief investment officer at Pacific Investment Management Co., manager of the world’s biggest bond mutual fund.
“Banks have a way of amplifying shocks in the system,” El-Erian said in an interview with PBS’s Nightly Business Report posted on the U.S. public broadcaster’s website. “The minute you introduce strains in the banking system, there’s always a fear that governments will be behind the curve and that you can get contagion.”
For more, please click on the following link to a Bloomberg report: Spanish banks with $167 in assets to combine.
That fear is hammering stock markets around the world today. With fear and destruction comes opportunity, however.
Gregg D. Killoren
victoria1014
