Northward bound

A couple of notes before the writer disappears to Holland for a week...

The Bank of Spain, wasting no time in the wake of the successful Bankia and Banca Cívica IPO's, has intervened in the operations of Caja de Ahorros del Mediterráneo - giving the boot to its board of directors in the process. The FROB will inject a reported 2.8 billion euros in equity capital and provide a 3 billion credit line before auctioning CAM off in the autumn. Seeing as now all of the significant players in the caja space are now seized or fully capitalized and converted into banks, we'll leave it to the reader to calculate how long it will take to get to the 127 billion euro guess at the system's capital requirements that was spewed out of the arse of some ratings agency or another late last year. Having done their sums, Ibex Salad fans might ask themselves if Moody's, et al, actually serve any purpose that is not the promotion of the speculative trend du jour.

Statistics watchers should note that non-performing loan figures for Spanish financials now no longer distinguish between cajas and banks and are quoted for the entire system. Makes sense considering the former have effectively ceased to exist. Wonderful invention at the end of the 19th century, but the euro turned into their personal Peter Principle.

Bankia went public at 40 percent of book. The support this bank will receive from what will almost certainly be a PP national government following elections next March makes it a 'buy'. This is, after all, still Spain.

Look for some improvement in the availability of credit in the near future. Lending was certainly suppressed by both Bankia and Cívica in the lead-up to their debut in the market.

Bankia's principal shareholder, BFA, cannot meet its obligations relying solely on the dividends it receives from its holdings in that bank plus Iberdrola and Mapfre. Continued pressure on housing prices will be the result of their selling off the property holdings inherited from the various cajas from which it sprang.

Hasta la vista, baby.

----------------------------