Tag Archives: Businesses

47.3% in Spain Expect Worse for 2013

13 Dec

An opinion poll carried out by the Government agency CIS, revealed 47.3% of Spaniards believe 2013 will be worse than 2012, whilst 31,7% think it will be much of the same. Only 12.6% had any hopes that it might improve, as predicted by the despairing Prime Minister Rajoy.
54.7% described the present economic situation as ‘very bad’. In the list of the 10 worst problems for the country, unemployment and evictions were top, followed by the political parties, the problems with the health system, corruption, the banks and immigration.

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Spain: The crisis of the week:

13 Dec

On Monday the country risk rose to 430 points and the interest rate on 10 year public bonds reached 5.61%
The Fitch Agency has warned that the prospects for the Spanish banking sector will be ‘negative’ in the coming year, due to public debt and the privatisation of nationalised entities
Eurostat reports that Spain, together with Romania, Bulgaria and Greece, has the largest percentage of people at risk of poverty, with 22% of total population
In spite of the refinancing of the banks, agency Moody warns that the number of bad loans in the Spanish banking system will continue to increase in 2013, and prices for dwellings continue to fall.

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Spain faces cuts of €20 billion

13 Dec

Spain is facing EU subsidy cuts of €20 billion, which means that for the first time it will become a net contributor – that is, paying more in than it gets out.

The reduction, scheduled for the period 2014 to 2020, will reduce Spain’s GDP by 2%, further weakening the country’s already fragile economy.

The cuts will affect agricultural subsidies by 17% and ‘cohesion funds’, payments made to help balance disparities between the regions, by 30%.

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Spain’s Bad Bank Seen as Too Big to Work: Mortgages

6 Dec

Spain’s bad bank will struggle to sell the 90 billion euros ($117 billion) of toxic property assets it takes from other lenders because of its size and inability to help buyers finance purchases.
“When managing tens of thousands of assets scattered across the whole of Spain, big is not beautiful, it’s sheer chaos,” said Mikel Echavarren, chairman of Irea, a Madrid-based financial adviser. A large, “clumsy” bad bank will be at a “tremendous” disadvantage and will generate losses that Spaniards will have to pay for.
Spain’s efforts to sell as much as 90 billion euros ($117 billion) of toxic property assets it uses to create a bad bank from lenders that take state aid will be constrained by the size and inability to provide credit to potential buyers, adding to the risk of taxpayer losses.
The country has until the end of next month to establish the institution, a condition for receiving 100 billion euros of external aid for the financial system it requested in June. Premier Mariano Rajoy’s government seeks to purge about 180 billion euros of bad assets that the Bank of Spain says are on the balance sheets of lenders. The government has said the bank will be profitable and won’t cost taxpayers.
The bad bank will not take deposits and so won’t be able to provide financing to potential buyers of its assets, Antonio Carrascosa, director general of the state run FROB bank-rescue fund, said in an Oct. 18 interview at a Barcelona conference.
The aim is to place soured real estate loans and other assets in the vehicle for as long as 15 years in the hope that, once cleansed of bad property bets, banks can resume lending and reactivate an economy mired in its second recession since 2009. The bad bank will have to compete with healthier lenders that have set up units to sell their own problem assets and can provide credit, known as vendor financing, to potential buyers.
Financing Agreements
“It won’t be a bank and the only way it may be able to achieve sales with attractive mortgages is by reaching financing agreements with other banks, which will be competing to deleverage their own real estate,” said Fernando Acuna Ruiz, managing partner of Taurus Iberica Asset Management in Madrid.
Acuna, whose company oversees 60,000 foreclosed properties on behalf of 25 banks, said that while the structuring will be in place by December, it will be “mammoth,” with tens of thousands of assets and loans to service and transfer onto its books. “Integrated management won’t be up and running for 12 to 24 months after,” he said.
Known by its Spanish acronym SAREB, it will have as much as 90 billion euros of assets based on their transfer price, initially comprising land, developer loans and residential units that went bad after Spain’s decade-long real estate boom turned to bust, an Economy Ministry official who spoke on condition of anonymity told reporters on Oct. 17.
Transfer Valuations
The Bank of Spain has yet to fix transfer valuations for the assets based on the stress tests of Spanish lenders carried out by management consultants Oliver Wyman and published on Sept. 28. The 90 billion-euro number is based on transfer prices, so the original value of the assets is likely to be higher.
In comparison, Ireland’s National Asset Management Agency, set up in 2009, spent 32 billion euros on mortgages with a face value of 74 billion euros to cleanse its banking system.
Lenders that take state aid will have to transfer to the bad bank foreclosed property of more than 100,000 euros, real estate and builder loans of more than 250,000 euros and controlling stakes in property firms, according to the Economy Ministry official. A decree to regulate the entity should be passed on Nov. 16. It may be amplified in the future to include loans to consumers, small- and medium-sized enterprises and retail mortgages.
‘Consume Capital’
“It will need a legion of lawyers, notaries and debt servicers to ensure properties and loans have no legal issues and change title documents,” Echavarren said by telephone. “By the time they find out what and where the assets are, they won’t have any idea of what they have and what to do with it for at least a year.”
The vehicle won’t have the resources to manage assets, which are like “livestock that consume capital,” he said. Holding the assets cost money in taxes, maintenance and security and will generate losses for Spaniards.
Spain is considering giving tax breaks to the bad bank, two people familiar with the matter said. They asked not to be named because the information isn’t public.
A lack of financing options will also hamper the bank, Echavarren said. “A bad bank can try to compete by slashing prices but as a buyer if you can’t get a loan, and the bad bank won’t be able to provide them, you can’t buy full stop.”
The FROB, which will be a shareholder in the bad bank, is searching for investors to take at least 51 percent of the vehicle, an onerous task, according to analysts including Krista Davies at Fitch Ratings.
Skeptical Investors
“Equity investors in the private sector are likely to be skeptical of the benefits to be drawn from investing in a wind- down vehicle,” Davies wrote in an Oct. 22 report. “As SAREB purchases will take place during a period of uncertainty around economic development in Spain, there is likely to be only a small number of potential private investors in SAREB.”
Jaime Guardiola, chief executive officer of Banco Sabadell SA, told reporters today in Madrid that more details about the bad bank are needed before it can decide on a possible role for the vehicle. Banco Santander SA (SAN) Chief Executive Officer Alfredo Saenz said he has concerns over the transfer price of assets, though they are based on incomplete information.
Concerns about Spain’s creditworthiness have grown since the government, which is struggling to trim a 2011 deficit that was more than three times the EU limit, requested as much as 100 billion euros in European Union aid in June to shore up its lenders and its economy contracted for a fifth quarter.
Ratings Reviews
On Oct. 17 Spain avoided joining euro-region peers Cyprus, Portugal, Ireland and Greece as being rated below investment grade by Moody’s Investors Service as it concluded a review for a possible further downgrade of Spain initiated in June. Standard & Poor’s lowered Spain’s ratings to BBB- on Oct.10.
According to Carrascosa, the bad bank “cannot make losses in the short, mid or long term.” As well as reaching accords with banks participating in the vehicle, the bad bank will need to reach agreements with other “healthy” financial institutions to arrange vendor financing, he said.
It also hasn’t ruled out selling homes individually.
“We can’t set up offices all over Spain because it’s too big so we’ll try to sell packages of assets to institutional investors and not individual apartments,” he said. “If we have to set up agreements with real estate agents, we could do it. Flexibility and profitability are the two key words.”
Santander’s Success
The bad bank’s limitations stand in contrast to Santander, Spain’s largest lender. The company advertises homes on its Altamira real estate website for as little as 40,000 euros in Madrid and apartments complete with swimming pool and garage on the coast of Moncofar in Valencia for 65,100 euros. The lender offers 40 year mortgages with loan to values of as much as 100 percent.
The strategy is paying off. Proceeds from sales of homes on its balance sheet reached 1.3 billion euros in the second quarter — almost as much as the total for the whole of 2011, according to Saenz who said on July 26 that sales are taking place at discounts of as much as 45 percent. Santander has reduced its exposure to Spanish real estate to 26.5 billion euros from 42.5 billion euros in 2008, the bank said today in a results presentation.
Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s second-largest lender, last year created BBVA Real Estate to handle its 30 billion euros of property assets.
‘Market Prices’
“Our policy is to sell at market prices with 100 percent financing,” Ignacio San Martin, head of research at BBVA Real Estate, said on Oct. 19. The bank is selling more houses than last year, though said that for large institutional investors, the bank prefers buyers to provide their own financing. “That way we don’t hold the loan on our books or have to provision them.”
Sabadell, a Catalan lender, sold 708 million euros of properties via its Solvia real estate unit in the first nine months of the year, up from 433 million a year earlier. The company is aiming for sales of 1.19 billion euros this year, according to an earnings presentation by the lender today.
The strategy works well for healthy banks, according to Fernando Rodriguez de Acuna Martinez, a partner at Acuna & Asociados, a real estate consulting firm in Madrid. If nationalized banks that transfer assets to the bad bank were forced to provide vendor financing for sales, it would perpetuate the subprime lending that initially got them into trouble.
“As a nationalized bank, you’d be looking at an asset that came to you via way of default, so do you really want to be forced to finance its sale again to get it out of the bad bank?” he said during a telephone interview.
Acuna said the best discounts are on the worst assets, where demand comes only from people with a low credit rating.
“So they are subprime or less than subprime borrowers and if you give them credit, you are assuming bad risk again. It’s a vicious circle as you are financing the very assets and debtors that got you in trouble in the first place.”

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Spain has taken painful steps to clean up its banks, but more may yet be needed

6 Dec

European Union regulators approved Spain’s plans to restructure its troubled banks, allowing them to get bail-out funds. One of the lenders, Banco de Valencia, is being sold off for a token €1 ($1.30).
THE delightful (though small) plates of tapas that often accompany an evening drink in Spain can, if eaten with gusto, end up replacing the meal they were meant to precede. After four years of appetiser-sized bank restructurings, bail-outs and reforms, Spain’s banking system may finally be getting its fill of public money.
On November 28th the European Commission approved restructuring plans that will allow it to inject €37 billion ($48 billion) in euro-zone funding into four Spanish banks. The money will allow for a clean-up of bank balance sheets begrimed by dud loans granted to property developers during the inflation of Spain’s colossal property bubble. Many of these loans are now worth just cents on the euro. Yet an earlier refusal by supervisors and banks to recognise the scale of the problem contributed to an erosion of confidence in both banks and in government finances.
Under the new plan, four banks including Bankia, itself the failed product of an earlier half-hearted restructuring of bust regional savings banks, will get cash from two of Europe’s bail-out funds. In return they have promised to cut their balance-sheets, stop lending to risky property developers and focus instead on lending to small and medium-sized businesses.

The sharpest cuts will be at Bankia, which has already been nationalised and which will receive public funds worth almost €18 billion (including €4.5 billion injected into the bank by the state in September). It will cut its branch network by almost 40% and its staff by 28%. Investors in the bank’s debt will also take a hit, with as much as €4.8 billion in additional capital coming from the mandatory swapping of hybrid instruments and subordinated debt for new shares worth less. Across all four banks, holders of hybrid instruments may take a hit of about €10 billion.
Forcing investors in some of the banks’ debt to take losses was a condition imposed by contributors to the bail-out funds to minimise the burden on taxpayers. Yet it will probably prove unpopular in Madrid, since much of this debt is held by tens of thousands of small investors, many of whom bought it after being assured by banks that it was as safe as deposits.
Bankia optimistically hopes to return to profitability next year and to be generating healthy returns by 2015. One bank, Banco de Valencia, was deemed beyond salvation. It will be recapitalised with €4.5 billion and then sold to CaixaBank, Spain’s third-largest bank.
A second key element of the bail-out will be the creation of a new “bad bank” in December. It will take dud loans from those being restructured. The government hopes this will help them regain the confidence of markets. It may also kickstart lending, and help revive an economy that contracted by about 5% in the year to August. Little detail was provided as to exactly how much debt the bad bank, known as Sareb, will take, but officials in Brussels said some €45 billion in Spanish banking assets would be transferred to it.
Officials in Brussels hoped that the markets would welcome the restructuring, saying it would “restore the viability of banks”. Yet even this new recapitalisation and restructuring plan may underestimate the voracious appetite of the Spanish banking system.
A report by staff at the International Monetary Fund (IMF) released on November 28th sounded warnings of further loan losses as Spain’s economy contracts. Losses on corporate loans have already increased sharply, yet those on mortgages remain remarkably subdued (see chart). Some deterioration in these seems likely if, as the IMF expects, house prices contract and unemployment also rises.
The IMF reckons that house prices, which have slumped 30% from their peak, may fall further given the stock of unsold homes and weak growth in household incomes. Unemployment, already at about 25%, may rise to almost 27%, the OECD warned in a separate report this week. The main course of bank restructuring may have been served, but a sour postre (dessert) may still be on the menu.

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Miranda Kerr & Andrés Velencoso for Mango

5 Dec

Miranda Kerr & Andrés Velencoso for Mango

12/04/2012

The Spanish fashion brand chooses international top models for the face of its Spring/Summer 2013 campaign.

Mango has always looked to famous faces for its advertising campaigns. Models and actresses like Kate Moss, Isabeli Fontana, Scarlett Johansson, Penélope Cruz, Milla Jovovich, Lizzy Jagger, Karolina Kurkova, Naomi Campbell, Eva Herzigova, Inés Sastre, Claudia Schiffer, Christy Turlington and Diane Kruger have all been Mango ambassadors.

Now Australia’s Miranda Kerr, best known as one of the sensual angels of lingerie brand Victoria’s Secret, is taking over for the Spanish brand’s new Spring/Summer 2013 campaign.

Chosen by People magazine as one of the best dressed women of 2012, the actress posed for a special photo shoot in New York, for top photographers, Inez van Lamsweerde and Vinoodh Matadin.

Mango has also updated its men’s line, H.E. by Mango, courtesy of Spain’s Andrés Velencoso. Since he modelled for Louis Vuitton with Jennifer López in 2003, he has become a key figure on the international fashion scene.

Since its creation in 1984, Mango has consolidated its position as one of Spain’s top international fashion companies, with the statistics to prove it: more than 2,500 shops in 109 countries, 11,000 employees, €1.408bn in turnover in 2011 and an export rate of 82%.

Munich is flagship destination for Mango.
E-commerce available at Mango shops.
Mango catwalk show at 080 Barcelona.

‘Three women and a baby’ case baffles officers

5 Dec

A STRANGE case of a ‘motherless’ baby at Mlaga maternity hospital has left National Police puzzled.
They say a young girl and her newborn baby were brought in by ambulance after having given birth elsewhere and suffering complications.

She was apparently accompanied by another woman.

But when the hospital tried to register the birth, they found the mother had given a false identity.

In the meantime, a security guard caught a third woman attempting to leave the building undercover with the same baby.

National Police have opened an investigation into who the baby’s real mother is, why the youngster gave a fake name and address, and why another woman tried to take the baby out of the hospital.

For the moment, the baby remains in hospital and is in the custody of the social services until the situation is clarified.

Officers say two of the women involved are Spanish and a third is from either Ecuador, Bolivia or Per.