Wednesday, January 27, 2010

BBVA Credit Quality Reality Check.....Spain & Portugal NPA Almost Double To 5.1 Percent

Grim is no overstatement......... Keep in mind that BBVA is probably one of the stronger players ( asset management, south america exposure ) when it comes to the Spanish banking system.....No wonder the "complacency" hit a high just two weeks ago...;-)

Übel ist sicher keine Übertreibung.... Verweise vorsorglich mal darauf hin das BBVA ( Asset Management & Südamerika Diversifikation ) als einer der stärkeren Spieler im spanischen Bankenmarkt gilt....Kein Wunder das weltweit die "Sorglosigkeit" noch vor 2 Wochen neue Hochs erreciht hat.... ;-)

BBVA Q4 Report / PDF
Doubtful risks stood at €15,602m, showing a 24.8% increase over the level reported at 30-Sep-2009.

The NPA ratio rose to 4.3%. This was higher than the third-quarter figure due to the aforementioned increase in doubtful assets. In Spain & Portugal the ratio was 5.1%
cleaner / schärfere Version

The Group’s coverage ratio of 57% at 31-Dec-2009 is considered adequate because if the value of the collateral associated to these risks is included (€16,842m), coverage would increase to 165%......
>Let´s hope their collateral comment has priced in the coming implosion of the Spanish housing market ( so far the market has only fallen slightly UPDATE: This BRILLIANT INTERACTIVE CHART gives an excellent hint that we have almost seen nothing yet )..... Otherwise the coverage ratio would be not quite "prudent"......Keep the following stat in mind....

> Bleibt zu hoffen das hier die jahrelange "Implosion" speziell des spanischen Immobilienmarktes eingepreist ist ( bisher ist der Verfall "moderat" gewesen UPDATE: Dieser brilliante INTERAkTIVE CHART zeigt eindrucksvoll das in Spanien in Sachen Korrektur noch "Nachholbedarf" hat ) ...... Ansonsten wären die vorgenommenen Rückstellungen vorsichtig ausgedrückt nicht gerade "weitsichtig".... Dazu sollte man sich nachfolgende Zahl ins Gedächnis rufen.....

Spain Bubble Watch

For a decade, the Spanish housing sector enjoyed uninterrupted growth, as low interest rates encouraged borrowing. Average house prices have nearly quadrupled during the past 10 years. About 750,000 homes were built in Spain in 2006 -- more than in France, Germany and the U.K. combined.

> Combine the number with unemployment rate hitting almost 20 percent and the picture isn´getting better.....

> Wenn man diese Zahl mit einer Arbeitslosenquote nahe 20% kombiniert dürfte klar sein was sich hier die nächsten Jahre abspielen wird......

UPDATE FT Alphaville

....meanwhile, it seems the group was forced to increase provisions after following through on actual foreclosures and acquisitions. In other words, it wasn’t until the bank acquired the assets that it realised the collateral had been misvalued on its books by €200m. The heart of the problem being the misvaluation of the collateral backing the loans.

>With this kind of accounting it is no wonder BBVA has manage to post a profit......But in comparison to Wells Fargo BBVA isn´t loocking so bad......Banks & balance sheet qualities....... Here we go again.... Nice to see that they are still talking about their "strong" capital ratios & the "nice" dividend ( 30% payout ratio )......

>Bei solch "konservativer" Bilanzierung ist es kein Wunder das BBVA es geschafft hat einen Gewinn auszuweisen....Wells Fargo mußte ganz andere "Verrenkungen" unternehmen ... Nur gut das wir in Sachen Bankenbilanzqualität so große Fortschritte gemacht haben..... Beruhigend zu hören das noch immer von der starken Kapitalausstattung und netten Dividende ( 30& Gewinnausschüttung ) geschwärmt wird....

In Spain & Portugal it ( coverage ratio ) was 48%.

>With over 90 percent of mortgages tied to variable rates they can only pray that the ECB will stay on hold for another decade....

>Da in Spanien über 90% der Hypotheken variabel verzinst sind dürfte dort Stoßgebete in Richtung EZB gehen das die Zinsen noch jahrelang auf dem Tief verharren werden....

>Does anybody remember this "fine tuning" news from Jan. 2009.......

>Erinnert sich noch irgendjemand an die "Fine Tuning" Operation der Banco de Espana vom Januar 2009....

How Not To Restore Confidence....."United Arab Emirates & Spain Edition"

Spanish website Cotizalia reports that Spain’s banks and cajas are negotiating on a one-to-one basis with the Bank of Spain to “fine-tune” their 2008 accounts in order to avoid taking catastrophic write-downs on lans.

According to the article, the central bank has agreed to allow the banks to increase the “calendar of amortisation” of these troubled assets, which are said to be mostly loans to property developers.

>Add the following trade ( couldn´t resist.... ) from the Spanish central bank to the mix and i´ll bet that hand in hand with the banking implosion the so far praised Banco de Espana will face some serious headwinds......

>Bei Begutachtung der o.g. Daten und des nachfolgenden Trades ( konnte nicht widerstehen...) wird eher früher als später vom Glanz der bisher so gelobten spanischen Zentralbank nicht viel übrig bleiben.....

Banco de España has already been delving into the covered bond market with money from gold-sale proceeds FT Alphaville May 2009

Barclays Capital on Wednesday morning cites Spain’s Expansion newspaper on a report that Banco de España has already been delving into the covered bond market with money from gold-sale proceeds .

We note that the latest available data, as reported to the IMF for March, show that Spanish gold holdings at end-March were 9.054mn oz, unchanged since end-July 2007. That said, it should also be noted that Spain slashed its gold holdings during 2005-2008: from 16.826mn oz at end-2004 to 9.054mn in July 2007.

PS: Iberia’s weighting is almost 20% of European GDP & Greece only 3%....

PS: Spanien & Portugal stehen mal eben schlappe 20% des European GDP.... Griechenland für 3%.....

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3 Comments:

Blogger jmf said...

European banks need €83bn FT Alphaville

Yep. Another day and (yet) another note on the impact of the Basel proposals.

And this one is pretty frightening.

Morgan Stanley’s Huw van Steenis reckons Europe’s big banks will need to find €83bn by 2012, or shrink their risk-weighted assets by 11 per cent, or €1,000bn.

6:53 AM  
Blogger jmf said...

More fun....

The Real Effective Euro
Ft Alphaville

that’s the purchasing power of the euro in each of the countries featured.

As BNP Paribas notes the rates currently suggest Ireland and Spain are operating at a higher effective euro rate than Greece. More worryingly, the Greek and Spanish rates are continuing to diverge.

In which case — and in light of BBVA’s rather larger than expected loan provisions announced Wednesday– can we expect all eyes to fall upon the likes of Spain soon?

The inner EMU competitive gap will remain an issue, but the surprising finding on this side is that the Spanish and Portuguese real effective exchange rate is higher than the Greek EUR, suggesting that markets might soon turn their focus to Spain and Portugal (See Chart 1).

This would put the EUR crisis into a new dimension, as Greece is only 3% of European GDP, while Iberia’s weighting is almost 20%....

would put the Spanish figure at nearer 20%, but still, a start is a start – and this gives us an indication of how much either wages and prices in these countries have to fall, or productivity rise, to make them competitive again, given that they are locked into the euro.

7:02 AM  
Blogger jmf said...

H/T Carlomagno

Talking about Spain and dubious loans...

"Spanish developers had a combined debt of 324 billion Euros in the third quarter of 2009, the equivalent of around 30% of Spanish GDP, according to figures from the Bank of Spain. The interest bill alone is around 15 billion Euros a year, which developers cannot hope to pay."


http://www.spanishpropertyinsight.com/buff/2010/01/27/real-estate-sector-bankrupt-says-spanish-mortgage-association/

8:07 AM  

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