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The Spanish banks

Tue, Jul 28 2009, 08:53 GMT
by Frank Øland Hansen

Danske Bank A/S


  • This is the second paper in a series on the Spanish economy. The first paper is The Spanish recession.
  • Spanish banks have suffered relatively small losses during the financial crisis because they invested very little in American sub-prime assets. But their exposures to the domestic housing market and Latin America pose a risk.
  • Spanish banks generally hold a better quality of assets than their European counterparts. Thus their expected losses are smaller, and with their larger reserves they are in a better position to sustain any further losses.

We don’t expect their balance sheets to deteriorate to an extent that would need much recapitalisation. We therefore anticipate the total amount of recapitalisation for the sector to be small.

Banking sector asset risks

Spanish leverage in the private sector has ballooned in recent years. Spanish banks have acquired more assets and increased their liabilities in the process. There is a potential risk of rising non-payments of loans, which could amount to significant losses for the banks. In this section we briefly explain the major risks that the Spanish financial sector is facing domestically and abroad.

Published on  Tue, Jul 28 2009, 08:57 GMT


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Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com

Legal disclaimer and risk disclosure

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

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