IIF estimates Spanish bank losses €216 to €260 Billion

The report from Fox Business News is linked here. Ginormous and humungus financial losses, such as these in Spain and those of the clearly already crippled banks in Greece, to be presumably eventually covered from elsewhere in Euroland, are presently being funded by the ECB, but who is providing any guarantees for such ECB spending of these mind-boggling sums?  That seems to remain a bit of a mystery shrouded in the Scotch Mist of TARGET2.

The EFSF emergency funding and that of the EFSM, the only two so far actually agreed, can provide nothing like sufficient sums, with or without the IMF.

Why is this plain fact not being discussed in the constant and ongoing mulilateral meetings or at least raised in the press conferences that follow them! The math is perfectly obvious!

Something is growing in Spain!

H/T Acting Man Blog, linked here.

Spanish Cajas get new regs - must find another €50 Billion!

The Houston Chronicle carries the story from AP which is linked from here. It opens with the following which carries the main gist of the latest EU crumbling:

— Spanish banks must raise an additional euro50 billion ($65.5 billion) to cover their exposure to toxic real estate loans and assets accumulated during a construction boom that went bust with the financial crisis, according to new regulations unveiledThursday.

Banks unable to meet the new provisions to cover troubled holdings will have the option of presenting merger plans to the government by May and could get government assistance from an existing bailout fund that will be strengthened with an addition euro6 billion, said Economy Minister Luis de Guindos.

Spain's Central Bank offers 80/90% loss coverage in selling CAM

The Wall Street Journal has an interesting item on the Spanish Cajas which seem to have been avoiding the spotlight during recent Itain and ever recurring Greek crisis headlines, read here. A quote:

In an attempt to sell CAM, as the lender is also known, the Bank of Spain is offering sweeping guarantees. According to people close to the central bank, it is offering to cover 80% of losses up to €2.5 billion at CAM and 90% of losses above that level. It is also offering a €2.8 billion credit line: CAM has been bleeding deposits and has to renew €5 billion in short- and long-term funding in 2012, a concern as it becomes more difficult for European banks to borrow.

Bank of Spain takes over Caja Mediterraneo, or CAM

The Spanish Central Bank will supply 2.8 billion euros ($4.02 billion) in a cash-for-stock transaction, read here, from the Latin American Herald Tribune. The deal was announced last Friday but seems little unpublicised in Europe. The rot in Spanish banking seemingly not worthy of much attention.

To meet CAM’s immediate liquidity needs, Banco de España also will extend the regional savings bank a 3-billion-euro ($4.3-billion) emergency line of credit.

The Board of Directors of CAM were sacked yesterday! A good example for Britain!

Has Spain's Santander Bank ripped off its customers?

There is an extremely interesting article from Bloomberg today, especially given the strange share price movements on the first day of trading for Bankia earlier this week, on how Santander has seemingly been shoring up its capital base  possibly contrary to the interests of its own depositers. The full article is here, from which comes this startling quote:

Banks such as Santander sell bonds convertible into stock to “dodge the bullet” of immediately diluting existing investors, said Simon Maughan, head of sales and distribution at MF Global Ltd. in London. Asking clients to buy stock-linked investments risks alienating them if they’re burdened with losses, he said.

“The last thing you want is 130,000 disgruntled clients,” Maughan said, referring to the mandatory convertible bonds sold by Santander. “If worse comes to worst they may have to compensate the customers and obviously that’s going to be unpleasant.”

If Greece soon defaults what value are the EU banks' stress tests?

It seems the entire world except for Angela Merkel, Wolfgang Schauble her Finance Minister and perhaps also President Sarkozy, now expect Greece to default, perhaps even with days.

It would save a lot of banking analysts a lost weekend reviewing the results of the ridiculous EU bank stress tests, due out in half an hour, if Greece just defaulted now and we could all finally discover where all the vast debts really are hidden.

No provision has been made for ANY Sovereign Default in any of the EU countries for these supposedly "more realistic" tests than those last year.

One report on the tests is here. The real situation in Spain as to how that country handles the losses from their own property bubble, will, of course, not be covered. My comments on that topic will appear shortly on Orphans of Liberty.

If ECB buys Italian Bonds today, will markets deem it a success?

Coverage on Italy's four fixed rate bond sales today from Reuters is here. The progress of Italy's austerity package which goes to its Senate today, is dicussed by Associated Press, linked here.

Elsewhere, the initial public offering of shares in two large Spanish Cajas continue to slip back, this time pending the stress test results due out tomorrow evening, read here.

Spanish Caja to float its shares at 50% - 60% of book value!

The EU madness continues, a report, summarised in this post's headline above, has just been released, linked here, which includes the following:

A Spanish savings bank is set to offer a substantial discount on a stock market listing to lure investors into its planned initial share sale, as fear of contagion of Greece’s debt crisis has caused firms to offer higher returns for the risk of investing in a southern European bank.

Bankia, a Spanish caja that is looking to list in July, will establish a price range on its prospectus – to be published tomorrow – at around 0.5 or 0.6 times its book value, a banker involved in the deal told Financial News. Bankia declined to comment.

Any failure to lure enough investor interest would worsen Spain’s already delicate financial situation, as the country, like other European peripheral nations, tries to avoid following Greece, Ireland and Portugal into a bailout.

Surely it should be obvious, that if the book value is at or near to the real value then none or little discount, even allowing for due caution would be really necessary. Thus this Cajas must be permitted under Spanish accountancy rules and practise, and one presumes,within Spanish law- to carry a book value almost double the real value of the assets it holds.

If this practise is common in Spain, or even permissable, and is in effect for a largish percentage of all the many such savings banks, then why is not Spain near default as well as Greece? Because of another EU contrived blind eye - I'll be bound!

The true depths of Europes debts must be many times the large numbers already being bandied about for the certainty of the Greek default!