Friday, May 18, 2012
Spanish economic troubles continue
As well as Greece Spain remains a concern in the ongoing EU debt crisis. Bankia the bank in which the government recently took a large stake was rumored to be losing depositors. Shares crashed on the stock exchange but recovered somewhat today.
Moodys credit agency added to the jitters by downgrading the credit ratings of several Spanish banks. If Greece were to leave the Euro zone this would cause even fear and investor worries about Spain. Any such move might make the cost of borrowing for Spain prohibitive.
Even the present problems are raising the cost of borrowing for Spain. Analysts estimate that Spanish banks may have up to 100 billion Euros in bad real estate loans. The government plans to require banks to retain up to 30 billion Euros to cover bad loans.
Spain may need to seek support for its banks through the European Financial Stability Facility. The uncertainties in Greece produce uncertainties in Spain. For more see this article and also here.