Among the evidence defending a fairly pessimistic thesis presented in the most recent post in Spain Economy Watch - entitled 'Santander's Banif Fund Suspends Payments'* - we find the following perhaps inadvertantly placed bit of truly good news (at least for those who would prefer to have the eurozone remain intact). Quoting from Reuters, the author notes:German Finance Minister Peer Steinbrueck said on Monday euro zone countries would have to pull together if one of them faced a "serious situation," adding that Ireland was in a "difficult situation."
Given that many commentators, particularly those of the Ambrosian school, have remarked that one of the possible (not to say 'probable') causes of the imminent demise of the euro was the self-evident and indisputable fact that Germany would not abide European monies being dedicated to the salvation of profligate and ill-administered fringe states, we cannot help but find Mr. Steinbreuck's declarations heartening.
To change topics to the actual case of Santander Banif Inmobilario, very interesting is the following take on the fund's dilemma. The publisher of MontalvoLand, economist José García-Montalvo, reports that two of his acquaintances, both investors in this vehicle, told him that they had recently been urged by their bank managers to redeem their shares at the first available opportunity. Confirmed by one commentor to the blog, Sr. Garcia-Montalvo does not discount the possibility that a run on the fund was orchestrated to defend against a similar, but real, eventuality.
IBEX Salad has no official opinion on this matter.
*In the interests of avoiding confusion as to what is taking place, 'suspension of redemptions' - which is what Santander Banif Inmobilario has invoked (as they are contractually entitled to do) - is not in any way a synonym for the headline's claimed 'suspension of payments'. Liquidity and solvency are not equivalent concepts, and there is no indication that the fund lacks the latter.
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4 Comments:
"(...)the possibility that a run on the fund was orchestrated to defend against a similar, but real, eventuality"
I feel a little stupid, but I don´t understand what similar eventuality is referenced there.
It has been bothering me, it is a fact that redemptions have been encouraged by Banif-Santander employees, with a success (80% of the fund)that speaks volumes about their firm grip on their client´s money.
But I cannot really pinpoint a reason, the more malicious explanation (that they were looking to cause high redemptions to justify the suspension) seems somewhat flawed:
-Just 10% was necessary and this would have been probably acomplished without any encouragement.
-The managers knows what their client´s want to do in advance, so they should have known that 10% would be reached without their intervention. If somehow that wasn´t the case, I am sure they could have micromanaged the situation to achieve a 15%,20% or 30% volume without a general policy of encouraging redemptions.
-I can´t see any benefit for Banif-Santander in the whole situation.
I am not looking for a more candid explanation, just an explanation that feels right.
Artista,
There's no explanation that 'feels right'. They all assume that the eternal Spanish conspiracy is in play.
Read the release from the CNMV. This is all coinciding with an 'extraordinary reassessment' of the fund's property portfolio. One might guess that Banif has gone to the CNMV for a totally unnecessary official permission to block withdrawals (the contract permits them to do this) so as to further armour themselves against lawsuits coming from the results of the assessment.
The car bomb is in the values of 'suelo rústico'. Undeveloped and unzoned land was legally permitted to be valued as if it were, in fact, urban - or at least as if it would effortlessly become so one day.
Manuel Conthe explains it all in a response to a comment here. It's very near the bottom of the comments section.
Cheers
A propos . . . .
Damn! I'm too late. Everyone will be after a euro MP job now.
http://www.telegraph.co.uk/news/newstopics/politics/4780912/European-MPs-earning-1-million-profits-in-a-term-report-finds.html
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