Even though Spain was also hit by the financial crisis, it can feel relieved as at least none of the national banks have gone bankrupt and the overall financial situation is relatively healthy. This however does not mean that the Spanish banks are not feeling the down turn and there is a big possibility of Spanish banks following in the steps of many other strong European economies, with mergers as a result. But it should be mentioned that at this point in time no official announcement of any mergers have been given.
Furthermore, Spain even though they have not felt the crisis to the same extent as many others, are willing to aid its financial sector in order to help restore the confidence needed in the markets, not only at home but globally. But at this point they are faced with various problems as it has not been clear to them whether European governments are trying to find solutions as a group or if each country should find its own solution. Due to this fact, Spain had decided not to take part in the pan-European deal to bring back confidence into the markets and were the ones with the lowest EU level to guarantee personal bank deposits.
After an emergency cabinet meeting on Monday the 13th of October, Spanish Prime Minister Jose Luis Rodriguez Zapatero, decided to provide up to €100bn for new debt issued by commercial banks. This has brought some discomfort within the country as opposing parties believe that they should not aim to help banks but rather focus more on helping families and SMEs in the country. Then again, the prime minister made clear that by helping financial institutions, they would be also helping families and SMEs in the end.
Opposing parties are mainly concerned about SMEs and families due to the fact that Spanish banks have not had to directly deal with the financial crisis that erupted in the US, but have primarily dealt with the problems of rising bad loans to enterprises and families following the crash in the country’s real estate market. Opposing parties believe that as property prices keep on decreasing and there is no hope that they will increase in the immediate future, all efforts should be focused internally. The main question now is to see if Spain will be selfish enough to focus on itself rather than help its fellow Europeans solve the financial problem collectively. This is a question that might affect Spain in the future and is something we will follow with great interest.
Furthermore, Spain even though they have not felt the crisis to the same extent as many others, are willing to aid its financial sector in order to help restore the confidence needed in the markets, not only at home but globally. But at this point they are faced with various problems as it has not been clear to them whether European governments are trying to find solutions as a group or if each country should find its own solution. Due to this fact, Spain had decided not to take part in the pan-European deal to bring back confidence into the markets and were the ones with the lowest EU level to guarantee personal bank deposits.
After an emergency cabinet meeting on Monday the 13th of October, Spanish Prime Minister Jose Luis Rodriguez Zapatero, decided to provide up to €100bn for new debt issued by commercial banks. This has brought some discomfort within the country as opposing parties believe that they should not aim to help banks but rather focus more on helping families and SMEs in the country. Then again, the prime minister made clear that by helping financial institutions, they would be also helping families and SMEs in the end.
Opposing parties are mainly concerned about SMEs and families due to the fact that Spanish banks have not had to directly deal with the financial crisis that erupted in the US, but have primarily dealt with the problems of rising bad loans to enterprises and families following the crash in the country’s real estate market. Opposing parties believe that as property prices keep on decreasing and there is no hope that they will increase in the immediate future, all efforts should be focused internally. The main question now is to see if Spain will be selfish enough to focus on itself rather than help its fellow Europeans solve the financial problem collectively. This is a question that might affect Spain in the future and is something we will follow with great interest.
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