The hard work you are doing Spanish banks to clean up their exposure to ‘brick’ with almost 54,000 million is not enough, says Goldman Sachs, which claims a further 58,000 million and the creation of a ‘bank bad ‘.
The investment bank acknowledged in a comprehensive report that financial reform has driven the Government of Mariano Rajoy, and forcing heavy adjustments to banks was not enough, according to the reaction of mistrust that still markets on the Spanish financial system.
The reason is that sanitation has imposed the Ministry of Economy is based on real estate exposure of banks right now, but does not clarify whether the entities will be able to address an increase in late payments in the future.
One way to eliminate these uncertainties and “satisfy the skeptics,” the bank said it would allocate another 58,000 million to sanitation, of whom 19,000 would be for losses on loans failed and 39,000 million for the entry of new arrears.
But even so, “this scenario does not solve the basic problem of Spanish banks” as is “absence of a credible market price for real estate assets.”
Goldman Sachs believes that even if it required additional recapitalization of banks in terms of a theoretical worsening economic situation, it “would not be more than that, a theoretical exercise.”
So the U.S. entity proposes a more effective and cheap, which was rejected at first by the government of Mariano Rajoy but has gained strength in recent days, given that the banking consolidation is calming anxiety markets.
This is creating a “bad bank” or independent society where banks can park assets ‘toxic’, once removed from its balance sheet.
“From our point of view, taking assets (problem) of the balance is an appropriate way to remove the doubts surrounding the valuation of these assets, and thus restore confidence.”
This solution, according to Goldman Sachs, would be much cheaper, given the low prices that have reached real estate. The bank estimates that the solution to remove real estate assets ‘toxic’ balance of cost between 21,000 and 37,000 million.
However, the bank opted for the lower band, 21,000 million, of which 15,000 would be “sufficient to balance out the ground” to build the banks, and 6,000 million for promotions under construction.
Goldman Sachs also believes that with this solution to create a “land bank to go further would be achieved with a new round of sanitation,” says the report.