Spanish Bank Safety?

[sleepyjohn]

Hi

I'm here on behalf of an 82yo friend of mine who has most all his savings in one bank.

He asked if I could check up on Sol Bank in Spain. I told him their credit ratings must be public.

Here they are with extra info at

http://press.bancsabadell.com/2010/11/fitch-affirms-all-of-banco-sabadells-ratings-and-upgrades-banco-guipuzcoano.html:

Fitch's ratings of Banco Sabadell are summarised below:

Long-term issuer default rating (IDR): A

Short-term IDR: F1

Individual Rating: B/C

Support Rating: 3

Outlook: Stable

Their share price is near the bottom of a 2/3 year gradual slope downwards.

http://finance.yahoo.com/echarts?s=SAB.MC+Interactive#chart1:symbol=sab.mc;range=5y;indicator=dividend+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined

I am told there is a 100kEuro government

guarantee.

What do we think about all that?

thanks John

Edited December 12, 2010 by sleepyjohn

[Khun Jean]

The money is in a triple danger zone. First inflation will eat away at the saving, i assume inflation is above the interest rates for savings as in may places in the world. Second a bank probably has a lot of 'toxic assets'. Who knows how much and which are the favored ones that get a bailout. Third it probably is all in euros, a currency that lost quite some value in the last few years.

Diversify is the best protection. Spread around more banks, ideally that all the money is insured. Spread in different currencies. And buy some, minimum 10% silver or gold.

Another way looking at it is, why not give almost everything away to his children. At least he will be around to see them enjoy it. Die broke.

[cardholder]

How much does he have with SOL, where does he live and what is his nationality.

[LaoPo]

Difficult to advise about a situation we don't know anything about other than that the chap is 82.

Diversification is an absolute must since we all know that banks can fall over and any money over € 100.000 is probably gone.

But, if the chap has € 10 Million or more (or less but still substantial) he sure needs a better advise than we can give here but spreading his money -fast- is a must.

Banco de Sabadell isn't the smallest bank and is also internationally spread around central- en south America with also offices in Florida but is only the 6th or 7th largest bank in Spain with Banco Santander the absolute largest.

There are also quite a few savings banks in Spain which are actually quite big.

The present problem with Spain is that nobody can tell how much money the Spanish banks have in building conglomerates and construction companies with bad assets (there are thousands of brand news appartments and houses...sitting empty out of a total of 1,5 million houses which are for sale on the market....a market WITHOUT buyers) as well as(bad) mortgages.

Spain is in deep trouble now and one can not be careful enough, protecting assets, and that also counts for a 82 year old Gentleman.

Good luck!

LaoPo

[sleepyjohn]

Thanks for the replies and sorry for tardiness I'm on the case now

How much does he have with SOL, where does he live and what is his nationality.

Knowing him my guess is he has a moderate amount perhaps 100k Euros or less, but it is his only backstop in case of emergencies so very important indeed.

He is Australian but lives in Thailand.

It's a shame he didn't simply have an Australian account all along and benefit from both high rates and rising Ozzie $ but that's hindsight.

Question is action or no action.......is Spain safe enough, is the Euro near it's bottom or not yet, and has Australian $ seen it's move up....is it topping and thus somewhat dangerous?

Edited December 16, 2010 by sleepyjohn

[LaoPo]

Thanks for the replies and sorry for tardiness I'm on the case now

How much does he have with SOL, where does he live and what is his nationality.

Knowing him my guess is he has a moderate amount perhaps 100k Euros or less, but it is his only backstop in case of emergencies so very important indeed.

He is Australian but lives in Thailand.

It's a shame he didn't simply have an Australian account all along and benefit from both high rates and rising Ozzie $ but that's hindsight.

Question is action or no action.......is Spain safe enough, is the Euro near it's bottom or not yet, and has Australian $ seen it's move up....is it topping and thus somewhat dangerous?

If he's Australian, lives in Thailand and has no intention of moving back to Spain at his age, why not move the Euros out of Spain into an Australian bank right away?

€ 100K is around AUD 134K.

If he doesn't want to move it to Australia he could think of moving it to Singapore or Hong Kong (but the latter seem to be more difficult although I can't be certain of that).

Besides, if I had money in a Spanish Bank account at this very moment, apart from some small cash up to a few K, I would remove it immediately. The Spanish Banks are in heavy weather and the economical situation in Spain is growing more bad by the hour.

I spoke to a few people, living in Spain, yesterday and it's not nice, not nice at all.

LaoPo

[Carib]

Spanish Bank Deposit Guarantees

Bank deposit guarantees in Spain are known as Fondos de Garantía de Depósitos (FDG).

The monetary amount guaranteed is limited up to a maximum of €100,000 per depositor in each credit institution. This was increased from €20,000 to €100,000 in October 2008, in reponse to the credit crunch.

The guarantee is applied per depositor. When an account has more than one holder, the sum would be divided between the holders according to the terms of the contract of deposit, or in equal parts otherwise. Each holder is guaranteed up to the maximum limit.

Holders of credit balances no covered by the guarantee (eg, amounts over €100,000) will continue to have the status of ordinary creditors of the credit institution.

http://www.spanishpropertyinsight.com/spain/topics/bf-bank-deposit-guarantees.htm

[LaoPo]

Spanish Bank Deposit Guarantees

Bank deposit guarantees in Spain are known as Fondos de Garantía de Depósitos (FDG).

The monetary amount guaranteed is limited up to a maximum of €100,000 per depositor in each credit institution. This was increased from €20,000 to €100,000 in October 2008, in reponse to the credit crunch.

The guarantee is applied per depositor. When an account has more than one holder, the sum would be divided between the holders according to the terms of the contract of deposit, or in equal parts otherwise. Each holder is guaranteed up to the maximum limit.

Holders of credit balances no covered by the guarantee (eg, amounts over €100,000) will continue to have the status of ordinary creditors of the credit institution.

http://www.spanishpr...-guarantees.htm

I know and that's nice, but if you're in old age of 82 and you don't live in Spain and a bank falls over, what you're gone do? Write to the government and ask them to pay the money into a Thai bank account?

It might take a year, 2 years before your (Government) guaranteed money is back but the question is: do you have enough time?

And..........there's more out there:

Roubini Says Spain Risks Bank Run Without More European Support

By Alex Kowalski and Tom Keene - Dec 16, 2010 7:43 PM GMT+0100

http://www.bloomberg.com/news/2010-12-16/roubini-says-spain-risks-bank-run-without-more-european-support.html

LaoPo

[sleepyjohn]

Thanks all though Lao Po if you look at a chart of the S&P and mark all of Roubini's down calls on it you can follow them.......all the way up.

[JusMe]

Spanish Bank Deposit Guarantees

Bank deposit guarantees in Spain are known as Fondos de Garantía de Depósitos (FDG).

The monetary amount guaranteed is limited up to a maximum of €100,000 per depositor in each credit institution. This was increased from €20,000 to €100,000 in October 2008, in reponse to the credit crunch.

All well and good, but timing can be an issue.

A good number of years ago I had an account with a bank which indicated some possible difficulties. It wasn't a large amount of money, but I pulled it out, even though it was guaranteed by the government. But if the bank had gone under (it didn't) and I had to depend on the eventual guaranteed payout, how long might I have had to wait, and what cash flow would they have provided while I was waiting.

The guarantee sounds great, but not if it takes a few years to pay off after you're stuck without cash.

[LaoPo]

Thanks all though Lao Po if you look at a chart of the S&P and mark all of Roubini's down calls on it you can follow them.......all the way up.

I better listen to friends in Spain who report to me that the number of people living in tents in parks is rising; they leave in the morning and come back at night; that the police wanted to move a family with children, sleeping in the entrance lobby of a large shop, onto the streets but when other bystanders got angry, moved on...

It was you who asked for advise and some gave it to you.

Up to you of course.

LaoPo

[LaoPo]

Thanks all though Lao Po if you look at a chart of the S&P and mark all of Roubini's down calls on it you can follow them.......all the way up.

My advise would be that you should have a talk with your 82 year old friend from Australia...and move his money before year's end. .

********************************

Spain's Banks to Face More Pain in 2011 as Funding Costs Squeeze Revenue

By Charles Penty - Dec 17, 2010 1:34 PM GMT+0100

excerpt:

'Handicapped'

"The financial institutions that will have most problems are those that are most handicapped in re-pricing their assets," said Albert Coll, deputy chief financial officer of Banco Sabadell SA, which makes two-thirds of its loans to companies. "They will be those that have a larger percentage of mortgages."

Banco Pastor SA, based in La Coruna, has the lowest ratio of mortgages to overall lending at 16 percent, while Sabadell, based in the Spanish town of the same name, has 17 percent and Madrid-based Banco Popular Espanol SA 18 percent, according to the Bank of Spain.

Mortgages to individuals account for about 29 percent of the Spanish loan book of Banco Santander SA, a spokeswoman for the country's biggest lender said in an e-mail.

Having a lower weighting of mortgages hasn't saved the banks from taking punishment from investors. Sabadell is down 19 percent this year, while Popular and Pastor fell 23 percent.

Loan Quality

"It's kind of the flip side of the coin," said Kane. "Sabadell and Popular may have more flexibility to re-price their loans but people also worry about the quality of their lending to small- and medium-sized companies and developers."

From:

http://www.bloomberg...ding-costs.html

LaoPo