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Bail-in leglislation used as Spains 6th biggest bank goes bust


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http://www.zerohedge.com/news/2017-06-07/spains-banco-popular-bailed-acquired-santander-€100

also more in the FT:

https://www.ft.com/content/4fe8680a-4b53-11e7-a3f4-c742b9791d43

Quote

Just four days after Banco UnPopular chairman Emilio Saracho told his employees "don't panic" as a result of the company's crashing stock price, on Wednesday morning the ECB confirmed that the sixth largest Spanish bank was indeed on the verge of collapse and ordered it to be sold, which is what happened when Santander acquired the bank for €1.00 after Santander's equity and riskiest debt instruments were bailed-in, i.e. wiped out, imposing losses of about €3.3 billion on the bank’s securities holders.

...

It breaks the mould of using taxpayers' money, instead imposing steep losses on shareholders and some creditors of the bank, a step two debt investors described as unexpected.

...

Furthermore, and in contrast to the banking crisis that unfolded in 2008, the move in Spain was also accepted with calm on stock markets and European bank shares moved upwards.

...

"This shouldn't pose any real problems for other banks," said Aberdeen Asset Management Head of Credit Research Laurent Frings. "But it does show that there is real risk in investing in these second-tier names."

In an attempt to ease concerns, Spanish Economy Minister Luis de Guindos said that Santander's takeover was a good outcome for Popular given its situation in recent weeks and it would have no impact on public resources or on other banks.

...

“It’s a unique opportunity at a very good time in the cycle," Santander Chairman Ana Botin said in a presentation to analysts

Sounds like a lot of positive spin being put on this. It certainly shows how they intend to pay for the next crisis. Surely that must have an effect on the amount that people hold under any one banking licence. Could that be a trigger for people to move money out of the banks and hence start a run into other assets?

Edited by doahh
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'it breaks the mould of using taxpayers' money, instead imposing steep losses on shareholders and some creditors of the bank, a step two debt investors described as unexpected.'

 

Of course, because shareholders, bond holders and other creditors of the bank should naturally not be forced to suffer the consequences of their investment/lending decisions.

Far better to make the plebs pay for it.

Edited by Errol
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First of many.CBs will try to force bigger banks/liquid to take them over as they go until they simply get too big to swallow.Id rate Santander and then Barclays as two that might roll over in the next crisis.Equity and bondholders wiped out by the look of it.Santander Chairman "a very good time in the cycle",is he for real?.

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It's a good thing in a healthy system.

It's not a healthy system.

TPTB have to avoid the domino effect at all costs. 

The result of putting the risk back onto shareholders as opposed to the rest of society, is that shareholders will now try to do their due diligence correctly.

I suppose if the banks look healthy there won't be a problem. But if they stop looking healthy, then that bail-in risk is going to accelerate the exit.

It's also hard to decide if a bank is solvent when the whole sector is buoyed by funny money.

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The biggets problem for Spain is, although the economy has stopped shrinking, is its not growing. There's so much debt overloading, even 10 years later, everyone over 40. Few people  under 40 does not have a job.

It didnt help that a lot of people under 50 left school at 15 to work on building sites.

And SPain is no longer the cheapest place in Europe - EE is, and they have better skills.

Spains a mess. Dont let anyone tell you otherwise.

Portugal is a better bet if you fancy buying a place in the sun but theres so much to rent.

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4 minutes ago, Si1 said:

What's the difference? (Apologies for my ignorance)

My understanding is that consumer banks needs to be incorporated in their host countries and abide by their host country banking rules - they are separate entities

Discovered some years ago when I jauntily marched into Deutsche bank in London asking to open an account in Germany - I got politely told to do one! :lol:

Edited by knock out johnny
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8 minutes ago, fru-gal said:

Barcelona was lovely when I visited recently. Clean streets, modern blocks of flats, lots of nature, lots of great architecture, much less people, nice clean playgrounds, good cheap food etc. They might not have money officially but I bet people there have a much better quality of life than most supposedly middle class people in London. 

Full on Roma'd now.

BIL rarely goes into town. He just sticks around the suburbs.

 

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11 minutes ago, Si1 said:

What's the difference? (Apologies for my ignorance)

Santander (UK) are just using the name and lciesing the tech.

The whole stinking fcked up goddknowwhat mess that is Santander (Spain) remains in Spain. Thank god.

Even with Santander lying thru its teeth, they do no have enough capital.

Santander have looked at Banco Pop's books for about 3 days and decided to buy it.

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13 minutes ago, fru-gal said:

Barcelona was lovely when I visited recently. Clean streets, modern blocks of flats, lots of nature, lots of great architecture, much less people, nice clean playgrounds, good cheap food etc. They might not have money officially but I bet people there have a much better quality of life than most supposedly middle class people in London. 

Oh Catalonia is lovely. I not keen on Barcelona - bit piled on each other.

Once you get to the coutryside its lovely and livable. I wish theyd not buy big dogs and elave them patrolling their estates though.

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30 minutes ago, fru-gal said:

Barcelona was lovely when I visited recently. Clean streets, modern blocks of flats, lots of nature, lots of great architecture, much less people, nice clean playgrounds, good cheap food etc. They might not have money officially but I bet people there have a much better quality of life than most supposedly middle class people in London. 

Really? I lived there for a few months and the dirt got to me. Dog poo especially - it seems to be acceptable to just let your dog crap in the middle of the pavement, but generally rubbish being not dealt with including restaurant waste. Salaries are about 2/3s of the SE of the UK, but rents are similar. The young professionals were all skint and mostly living at home into their 30s, those from out of town were slumming it in HMOs miles out into the suburbs.

Don't get me wrong, it's a great place to visit, but I'm not sure the quality of life there is that great, especially for the young. That said the weather is much better and there is a beach. So for a brit it's a welcome change.

Edited by Bear Goggles
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30 minutes ago, knock out johnny said:

My understanding is that consumer banks needs to be incorporated in their host countries and abide by their host country banking rules - they are separate entities

Discovered some years ago when I jauntily marched into Deutsche bank in London asking to open an account in Germany - I got politely told to do one! :lol:

DB in the UK is only commercial. If you want a DB personal account you can open one in Germany even if UK national and resident in UK. I did this 7 years ago

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1 hour ago, Bear Goggles said:

Really? I lived there for a few months and the dirt got to me. Dog poo especially - it seems to be acceptable to just let your dog crap in the middle of the pavement, but generally rubbish being not dealt with including restaurant waste. Salaries are about 2/3s of the SE of the UK, but rents are similar. The young professionals were all skint and mostly living at home into their 30s, those from out of town were slumming it in HMOs miles out into the suburbs.

Don't get me wrong, it's a great place to visit, but I'm not sure the quality of life there is that great, especially for the young. That said the weather is much better and there is a beach. So for a brit it's a welcome change.

May be a Pan-Spain phenomenon. That was the biggest negative of visiting Seville last December. Dog poo everywhere.

If you want clean city streets, Switzerland is the OCD nation of choice IME.

Not much to say on Banco unpopular. Seemed inevitable after the denial. Italian bank next up for bail-in?

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No sign of anyone losing any euros in personal bank accounts to me.

I would expect the shareholders then bondholders to get wiped out. Sounds logical to me. Why should tax payers pay for it?

Surely the bigger picture is who holds the CDS on the bank itself, thats where the contaign will occur.

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29 minutes ago, GreenDevil said:

No sign of anyone losing any euros in personal bank accounts to me.

I would expect the shareholders then bondholders to get wiped out. Sounds logical to me. Why should tax payers pay for it?

Surely the bigger picture is who holds the CDS on the bank itself, thats where the contaign will occur.

Would the CDS have been acquired by the ECB as part of their QE strategy....backdoor govt bailout?

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7 hours ago, knock out johnny said:

My understanding is that consumer banks needs to be incorporated in their host countries and abide by their host country banking rules - they are separate entities

Discovered some years ago when I jauntily marched into Deutsche bank in London asking to open an account in Germany - I got politely told to do one! :lol:

Within the EU they can operate under a 'passport'.So may not be licenced in the UK

http://www.bankofengland.co.uk/pra/Pages/authorisations/passporting/default.aspx

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7 hours ago, spyguy said:

Santander (UK) are just using the name and lciesing the tech.

The whole stinking fcked up goddknowwhat mess that is Santander (Spain) remains in Spain. Thank god.

Even with Santander lying thru its teeth, they do no have enough capital.

Santander have looked at Banco Pop's books for about 3 days and decided to buy it.

For one euro and then raise E7bn in a rights issue.ECB must be lubing up for that one

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1 hour ago, Sancho Panza said:

For one euro and then raise E7bn in a rights issue.ECB must be lubing up for that one

Interesting to see who is stumping up for the rights issue.At least the equity and bond holders got cleaned out on this one.Looks like Santander was a bondholder as well in it.They have been bailed in, then buy it :blink:.40 billion Euros of impaired property loans.If they ran out of liquidity it says the banks are no too happy lending to each other again.

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