Terrified Spaniards Withdraw $82 Billion From Banks

Spaniards alarmed by the dire state of their banks are squirreling money abroad at the fastest rate since records began, figures showed on Thursday, and the credit ratings of eight regions were cut. Spain is the next country in the firing line of the euro zone's debt crisis, with spendthrift regions and shaky banks threatening to blow a hole in state finances and pushing funding costs towards levels that signal the need for a bailout.

The European Commission gave new help on Wednesday, offering direct aid from a euro zone rescue fund to recapitalize Spanish banks and more time for Madrid to reduce its budget deficit. That helped lower the risk premium investors demand to hold Spanish 10-year debt rather than the German benchmark on Thursday, but it remained close to the euro-era record, at 520 basis points.

Bank of Spain data showed a net 66.2 billion euros ($82.0 billion) was sent abroad last month, the most since records began in 1990. The figure compares to a 5.4 billion net entry of funds during the same month one year ago. Read more >>

5 Banks Downgraded in Spain Along With Largest Bank Bailout in Spain’s History

Tiffany Hsu
Los Angeles Times
Standard & Poor’s just slashed the credit ratings of five banks and said the country is headed into a double-dip recession. One of them, Bankia, just asked the government for 19 billion euros in aid - a roughly $23.8 billion boost.

That makes it the largest bank bailout in Spain’s history. Combined with escalating concerns that Greece is about to execute its so-called Grexit from the euro currency, the news is doing nothing to alleviate the heightened anxiety in the euro zone.

3 Portuguese Banks Lose More Than 660 Million in 5 Days

Bank Millennium 

Cut the rating of Spanish banks and the poor performance of the largest Portuguese banks have caused a loss of more than EUR 660 million in capitalization of the BES, Millennium bcp and the BPI.

Within a year, the market value of the BES, Millennium bcp and the BPI fell 61%. Only at the end of last week, after the rating of Spanish banks have been revised downwards again, the three Portuguese private banks lost more than 660 million in market capitalization.

BES was the bank most penalized, having lost about 570 million of value in exchange, as a result of a fall of 22.26% in the share price. Millennium bcp, that seemed no longer able to fall much more, yet depreciated 4.85%, with its share to fall up to 9.6 cents.

Translated Source

Biggest Weekly Loss For S&P Since November 2011

The world’s richest people lost a combined $32.8 billion this week as concerns over a possible Greek exit from the euro area pushed the Standard &Poor’s 500 index to its biggest weekly loss since November 2011.

Mexican Carlos Slim, 72, lost the most during the week, as shares of his Mexico City-based telecommunications company America Movil SAB fell 4.38 percent. Slim, who lost $4.1 billion, remains the world’s richest person with a $65.5 billion fortune, according to the Bloomberg Billionaires Index.

The S&P 500 fell 4.3 percent to 1295.22 during the week as Greece failed to form a government and Moody’s Investors Service downgraded 16 Spanish banks, citing a recession and mounting loan losses. The S&P 500 is down almost 9 percent since April 2. More...

Longest Loss Streak For Japan Stocks Since 2001

Japanese stocks fell, with the Topix Index capping the longest streak of weekly losses since the Sept. 11 attacks in 2001, as exporters declined after U.S. economic data missed estimates and a rating cut of Spanish banks fueled concern Europe’s debt crisis is deepening.

Sony, Japan’s No. 1 exporter of consumer electronics that depends on Europe and the U.S. for 38 percent of its sales, fell 5.3 percent. Hitachi Construction Machinery Co. led machinery makers lower after industry bellwether Caterpillar Inc. said its sales growth slowed. Mizuho Financial Group Inc., Japan’s third-largest bank by market value, paced losses among lenders, dropping 3.4 percent after Moody’s Investors Service downgraded 16 Spanish banks.

The Topix index fell 2.9 percent to 725.54 as of the 3 p.m. trading close in Tokyo, capping its biggest daily loss since Aug. 5. The measure fell 4.3 percent this week, its seventh week of decline. It has dropped for seven straight weeks only twice since November 1977 -- in 2001 and 1995. About eight stocks fell for each that rose. More...

Bank Runs In Greece Will Soon Be Followed By More Bank Runs In Europe

Depression: "Runs on Banks": people milling about outside of bank. Photograph of Anxious Depositors, 02/28/1933 (Photo credit: Wikipedia)

The bank runs that we are watching right now in Greece are shocking, but they are only just the beginning.  Since May 6th, nearly one billion dollars has been withdrawn from Greek banks.  For a small nation like Greece, that is an absolutely catastrophic number.  At this point, the entire Greek banking system is in danger of collapsing.  If you had money in a Greek bank, why wouldn't you pull it out? 

If Greece leaves the euro, all euros in Greek banks will likely be converted to drachmas, and the value of those drachmas will almost certainly decline dramatically.  In fact, it has been estimated that Greek citizens could see the value of their bank accounts decline by up to 50 percent if Greece leaves the euro.  So if you had money in a Greek bank, it would only make sense to withdraw it and move it to another country as quickly as possible. 

And as the eurozone begins to unravel, this is a scenario that we are going to see play out in country after country.  As member nations leave the eurozone, you would be a fool to have your euros in Italian banks or Spanish banks when you could have them in German banks instead.  So the bank runs that are happening in Greece right now are only a preview of things to come.  Before this crisis is over we are going to see bank runs happening all over Europe. More...

Next Bailout: Spain - Economy Faces "Crisis of Huge Proportions"

BARCELONA, SPAIN - MARCH 30: A Carslon Wagonlit Traves employee is seen through a broken window on March 30, 2012 in Barcelona, Spain. 

Spain's sickly economy faces a "crisis of huge proportions", a minister said on Friday, as unemployment hit its highest level in almost two decades and Standard and Poor's downgraded the government's debt by two notches.

Unemployment shot up to 24 percent in the first quarter, one of the worst jobless figures in the developed world. Retail sales slumped for the twenty-first consecutive month as a recession cuts into consumer spending.

"The figures are terrible for everyone and terrible for the government ... Spain is in a crisis of huge proportions," Foreign Minister Jose Manuel Garcia-Margallo said in a radio interview.

Standard and Poor's cited risks of an increase in bad loans at Spanish banks and called on Europe to take action to encourage growth. More...