A Rock and a Hard Place

Reuters, bless its soul, is reporting that Spain is utterly awash with investment banking types snooping through both the books and the bullshit of the bankized spawn of the cajas de ahorros. An article published yesterday under the title, Spanish cajas a "feast" for bankers. As one their interviewees said, "Spain is a sort of feast for investment bankers today,... It's very rare that a single large country will probably have a third to half of the sector potentially under change of control."

One one side, private investors which Capital Madrid believes will get interested in the less bad entities at 50 percent of book value - accompanied by a complete cleansing of their management. On the other, the FROB. The Spanish state bank solvency fund, which will take an equity stake in the institutions that can not sort themselves out, has just announced the naming of the head of the department that has been inspecting the nation's cajas as director-general of the program itself.

We believe that the cajas that might think they'll get a better offer from the FROB than from the private sector - and commentators amongst the public at large that are certain that this will take place - will both be disappointed by the promotion of Mariano José Herrera to his new post.

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