Banco Popular: zombie bank regulators approved and has sold over one euro

Esther Miguel Trula

Why are back in the banks today?Why the statements in the media call the "calm" encouraging us to suspect that something happens very murky? Are we going to play live the crisis 2.0 and have not left the first?More importantly , what makes Santander  buying companies with good morning rounds of bread ?Then we will try to summarize all this in four key.

It has cost a euro?

Easy: no. It is a symbolic payment .Ana Botin and his family  will increase its capital by 7,000 million euros  for performing the absorption of Banco Popular.

And it will pay all Santander?

Well, the first thing is that all  the shareholders and small and large, have lost their money . And it will trigger a  conversion of the debt , but, having holes possible  he will clog the Santander .

So what of the People is not going to cost the citizens? Can you just give all this?

Guindos Europe and  you swear and rejuran  no, I trust blindly in the Santander can not fall only by an acquisition that represents  less than 10% of the bank's resources . What isnot discussed much is that this bank, like everyone else, were allowed during the crisis  accounted for as equity tax credits . To convert these loans in regulatory capital required them to Europe State guarantee and Spain signed.

Economy Minister Luis de Guindos.

After the crisis the European authorities considered it was a hard blow for citizenship national bank bailouts, as happened in many countries, including Spain. The Single Resolution Mechanism was created to European, the FROB in Spain but which  prevents taxpayers are the first to support the rescue  of financial institutions and asks other banks to pay the costs of the resolution.

This  is the first time the MUR have to run the containment plan , and now says that shareholders and subordinated debt take off, probably 100%. And that means that the public endorsement of the tax credit will be executed and the Spaniards will pay part of bankruptcy.

Is this the same tactic rescue did with the savings banks in crisis?

In principle we have tried to avoid this and is expected to Santander to goad the whole mess. It relies on the ability of management Botin  to consolidate their accounts and avoid contagion.

To all this: why do you want to buy a Santander bank debt?

Because  the Santander now has plenty of liquidity  to cope withdebt and thus  wins market loans to SMEs that had the Popular and its offices and customers that from today are effectively clients Grupo Santander with the same rights than others. Return on investment within two or more years and the company becomes  the largest bank in Spain in market share  in loans and and deposits with 17 million euros.

Well, and how the People's Bank has come to this situation?

Angel Ron, president of the Bank of Spain in 2011.

Popular,  very involved in the brick,  and had a zombie accounts for years . In theory that banks were under  the supervision of the ECB after the crisis would prevent could act irresponsibly or unfeasible. But between 2011 and 2016 the People 'sBank  approved three of four tests  of solvency referred to it by the European Central Bank (ECB), the European Banking Authority (EBA) and the Bank of Spain.

Which he suspended, for  2012 , showed that  needed more than 3,000 million  and had many troubled assets, with houses and lands they have lost in recent years to 80% of its value. Europe okayed , or put another way, the stress tests were not worth a long way . The thing was moving in increasingly dangerous cycles: toxic properties have been caused continuous provisions , these provisions have caused losses and these losses have led to continuous declines in the stock market.

But  facing the gallery everything went relatively well ,  correct to say the least , and since late 2016 its leaders, with  Emilio Saracho  at the head, were doing, in principle, an efficient sanitation work. In February this year after the bank received a  capital increase of 7,000 million euros  that ate in a few days, the solvency of the company was guaranteed by the usual requirements viability of banks (had a  ratio Phased-in ET1 12.12% ).There was no worry.

Two simple figures:  in 2007, when the bank was capitalized by 18,000 million , shares of People  came to reach 35.36 euros . Last Friday was 0.35 euros, and hence BP yesterday had traded worth more than a billion and now be sold to euros.

Are we being lied to and go to a new banking crisis?

Banco Popular Chairman Emilio Saracho until today at an extraordinary meeting to shareholders in May.

They do not lie, but  dissimulate .The FROB  has insisted  that the current infeasibility is based on the "deterioration of its deposit base over recent months and uncertainty about their private plans to deal withpossible damage to the balance of the entity". That is, it is a thing of now, not "those dusts these muds" 2012.

But in principle everything should be fine. It is taking advantage now from years ago that the risk premium is short and that people again want tospend money on Spain to  remove dirt from the accounts . But  there are those who look fearful to Italy , where some of its banks are engaged in similar to the People 's problems washing effectiveness has not been very high (yes, the MUR has not found it necessary to get involved in the matter) and new money as in the rest of Europe, is still missing.

If Italian politicians  are talking about a euro exit , it's time to worry.