Village life in Andalucia

The European Banking Authority, an organisation commanding little respect among world investors, today sought to attack and undermine the Spanish economy by publishing a spurious and misleading report on Spanish Banks.

Headlines report that five of the eight banks that failed the “stress test” applied by theEuropean Banking Authority were Spanish.

There is of course, no room in a headline to observe that all of these apparently  failing banks – CaixaCatalunya Savings Banks, Unnim, Caja de Ahorros del Mediterraneo, Caja 3 and commercial bank Banco Pastor, are all little co-operative banks, largely set up to finance farmers whose businesses are collapsing for entirely temporary and passing reasons.

Germans lying about the cause of an e coli outbreak for example, causing Spanish farmers to dump their entire crop of cucumbers in the the river bed.

Such “investors” invest relatively miniscule amounts of money, so their failure to repay would have no affect whatsoever upon the security of the Spanish economy.

The Bank of Spain has correctly insisted that no injections of capital are required to sustain these banks. Nevertheless the headline “Five out of Eight banks that failed the stress test are Spanish” – strikes at the confidence of the reader, to the obvious detriment of investment in the Spanish economy.

The central bank has explained that the definition of capital did not include generic, or anti-cyclical provisions. These are unique to Spain, and are convertible bonds with mandatory later conversion dates. If these items are included, no further capital is required at all to sustain any Spanish bank. Nevertheless the headline “Five out of Eight banks that failed the stress test are Spanish” – strikes at the confidence of the reader to the obvious detriment for investment in the Spanish economy.

Of the 90 banks “tested” in 21 European Union countries, 25 were Spanish — almost the whole of Spain’s banking system and about 35% of the overall sample. One hundred percent of listed Spanish banks and all of the cajas (co-operative farmers banks) were “stress tested”.

By contrast only the great corporate banks in the United Kingdom, such as the Halifax were tested. It is well known that the Spanish Banking system is not only strong but it can and has eaten the British banking system for breakfast. Note Santander’s purchase of the RBS and the Abbey. Needless to say the main Spanish banks such as BBVA andSantander pass the “stress test” with flying colours. Nevertheless the headline “Five out of Eight banks that failed the stress test are Spanish” – strikes at the confidence of the reader to the obvious detriment for investment in the Spanish economy.

When will these pathetic euro-aparachiks learn? No-one is suggesting that the consumer should be deceived. To be sure deception has already happened, with the help and collusion of the European Banking Authority that is clearly too frightened to ruffle the fur of the big cats, and would prefer to state the obvious with regard to poorly capitalised local co-operative banks. All we ask is that these idiot “stress testers” take time and space to make their information accurate, or that they shut their stupid mouths. Any street cleaner taking a coffee in their local bar is better informed than these self-regarding besuited oafs.