Spain managed to decouple itself from Portugal, Ireland and Greece, but its banks are still struggling. The bigger banks are doing well, and the smaller ones were riding on their success. Well, the ride may be over.
In 2011, 16 billion euros of Spanish bank debt is maturing. 8 billion is already covered. This half belongs to BBVA and Santander, Spain’s largest banks. The other banks have been riding on the strength of these two banks and borrowing money through them.
But in April, this changed:
Smaller Spanish banks struggled during April, as both net debt issuance and access to the domestic repo market, i.e. MeffRepo, declined.
So how are the small banks financing themselves? Probably through the ECB that is the last resort. This sum is expected to increase in the next few months.
And don’t forget that there’s a lot of unaccounted for debt in Spanish local authorities – this will add pressure on Spanish banks as well.
German taxpayer gets the bill
As Germany provides the biggest share of funds for the European Central Bank, this means more pressure on the German taxpayer.
This comes on the background of a report in the that Germany changed its stance towards Greece and is now willing to put more money before Greece runs out of cash in a matter of weeks – yes, weeks. Up to now, European leaders were moving quite slowly, while Greeks began getting ready and withdrew large sums of money from the banks.
Earlier, German officials were already preparing for some kind of restructuring – some kind of burden sharing with the holders of Greek debt. Well, the ECB managed to force Germany to change its mind..