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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (27470)	1/7/2008 11:44:44 PM
From: energyplay	Read Replies (2) \| Respond to of 219782

Many of the larger Spanish banks have large operations in South America that are making lots of money - but will that be enough to bail them out ?

To: TobagoJack who wrote (27470)	1/8/2008 2:25:58 AM
From: elmatador	Read Replies (1) \| Respond to of 219782

Santander has overtaken Royal Bank of Scotland, Wells Fargo in the US, UBS of Switzerland and Mitsubishi in Japan to become the eighth-largest bank by market value with a capitalisation of $136bn - up $16bn in a year. Spain's top bank rises steadily in the global ranks Every Monday morning, Emilio Botín, chairman of Grupo Santander, Spain's biggest financial group, inspects the global ranking of the world's largest banks. In the past 12 months, Santander has overtaken Royal Bank of Scotland, Wells Fargo in the US, UBS of Switzerland and Mitsubishi in Japan to become the eighth-largest bank by market value with a capitalisation of $136bn - up $16bn in a year. The Spanish group's growing international stature is a sign of how the US subprime mortgage crisis has buffeted the fortunes of other financial giants. But it is also a tribute to Mr Botín's dealmaking prowess and the group's conservative risk managers, who kept Santander out of high-risk investments linked to US mortgages. As a result, Mr Botín indicated that the financial distress in the US and the UK could throw up buying opportunities for Santander. In an interview with the Financial Times, Mr Botín said Santander's global expansion was not yet complete and that he would like the group to expand in the UK and the US. What is more, he will have the financial muscle to do so. Unlike the big US banks and some European ones, Spanish lenders have weathered the subprime fallout relatively well. There have been no big write-offs - in part because Spanish banks were making far too much money to dabble in dodgy US mortgages, and also because the Bank of Spain, the financial regulator, banned off-balance sheet conduits. Nevertheless, the credit squeeze has affected the ability of Spanish banks to fund themselves abroad and Santander is no exception. Unless the liquidity constraints ease in 2008, Spanish banks will be restricted in how much they can lend and the dramatic growth in credit might come to a rude halt. But Mr Botín is an optimist. The fact that risk is being repriced is a good thing, he says. The credit squeeze "has been a reality check for banks, regulators and rating agencies", added the Santander chairman. Mr Botín, 73, is still glowing from the successful completion of the ABN Amro acquisition - an unrepeatable deal, he says, put together by a once-in-a-lifetime consortium led by RBS that also included Fortis of Belgium. He takes meticulous care of his diet, as evidenced by a breakfast of eggs, broccoli and tomatoes, drizzled with olive oil. He never touches bread and is a keen golfer. Santander's corporate headquarters outside Madrid includes an 18-hole golf course. Santander is better placed than most to weather the tight credit conditions. It has a retail network of 14,000 branches in Spain, the UK and Latin America, which gives it a large depositor base that will allow lending to continue, albeit at lower levels than in the past five years. This may also be a good thing. Juan Quintás, chairman of the confederation of Spanish savings banks, says it is about time banks reined in lending. Credit during Spain's housing boom was growing at five, and in some years six, times the rate of growth of the economy as a whole. The situation was not sustainable, he says. There is some concern that bad loans will rise next year with the end of the property boom. In Santander's case, some €77bn ($113.5bn) - or 34 per cent of its Spanish loan portfolio - has been lent to mortgage holders and real estate developers, according to a presentation to investors in September. However, actual loan defaults remain low at Santander and loan loss reserves are much higher than elsewhere in Europe. Santander set aside €9bn in provisions against bad loans, enough to cover 169 per cent of its current level of non-performing loans. Up to now, Spanish banks have dealt with the liquidity squeeze by issuing mortgage-backed securities - for which there are no takers - buying the paper themselves and using it as collateral for European Central Bank funding. At the end of October, Santander brought Spain's moribund covered bond market back to life with the placement of €1.5bn in five-year covered bonds, secured against mortgages. It has been the only large securitisation since the summer. Mr Quintás said savings banks were getting ready to tap the market early in the new year. With lower lending in Spain, and a cooling housing market in the UK, most of the growth in Santander's profits is expected to come from Latin America next year. Copyright The Financial Times Ltd. All rights reserved.