There are significant forthcoming changes in the Spanish and Portuguese marketplaces. As well as securities settlement harmonisation (central securities depositories that signed up for T2S in May 2012 included Spain’s Iberclear and Portugal’s Interbolsa), there has been significant structural changes taking place in the Spanish banking system, with the crisis leading to increased centralisation.
There are significant forthcoming changes in the Spanish and Portuguese marketplaces. As well as securities settlement harmonisation (central securities depositories that signed up for T2S in May 2012 included Spain’s Iberclear and Portugal’s Interbolsa), there has been significant structural changes taking place in the Spanish banking system, with the crisis leading to increased centralisation.
The results of the EU banking watchdog’s review of 91 banks were released in 2011. The yearly review assesses whether the banks have sufficient capital on their balance sheets.
A survey by Morgan Stanley estimated that fewer than 10 banks would fail the test, and that €30 to €40 billion of capital would be raised in the run-up to or after the exercise.
Unlisted banks in Spain were predicted as most likely to fail the test, and Nomura analysts identified Spain’s Bankinter and Sabadell as vulnerable.
The Bank of Spain has already tried to paper over the cracks, nationalising and selling off the troubled cajas Unnim (bought by BBVA) and CAM (bought by Sabadell).
Banca Cívica, which is another merged caja that was listed on the stock market in the summer of 2011 along with Bankia, was merged with Caixabank, and three unlisted Spanish savings banks—Liberbank, Ibercaja and Caja3—were to combine to create Spain’s seventh-biggest lender by assets.
However, the board of Spanish bank Ibercaja decided to break off the merger with Liberbank SA, due to a dispute over various stakes in the three-way merger.
Meanwhile, cumulative borrowing by Portuguese banks from the European Central Bank rose 1.4 percent to €49.4 billion at the end of May.
The rift within the country’s ruling coalition started as an internal political battle, and expanded to a debate over the bailout plan.
The crisis has threatened to derail the country’s planned exit from the EU/IMF bailout, and has frozen Portugal out of international markets again, and raised funding costs for Millennium BCP and Banco Espirito Santo, as well as Caixa Geral, and Banco BPI, on capital markets.
This could be good news for the more global custodians in the country. State Street and BNP Paribas both settled in Portugal to access the developing Latin American markets, seeing the country as a strategic gateway to Brazil, South America and parts of Africa.
Deutsche Bank also began offering custody services in 2008, with the bank establishing a direct link between its Euronext platform, Interbolsa, and Banco de Portugal.
Though there are various advantages to both countries—such as the deep trade ties between Portugal and South America—political and financial troubles in Iberia will ensure that the markets are not out of the woods as of yet.
