What if Santander falls?

[munudeges]

Both Santander and BBVA are, AFAIK, out of this loan.

With all due respect, you don't know that at all. No one is being told anything about this and the 100 billion twill disappear faster than you can say it. They will then find another 100 billion liability they didn't know about...........

The main reason being them acting as normal commecial banks, which means most people didn't get mortgages with them.

Firstly, there is no such thing as a normal commercial bank. They're all at the same things and any regulators that there are stand by and drink the free champagne. Secondly, regardless of who gets mortgages from who there is this thing called the securities market where loans, mortgages and debts are packaged up together, sliced and diced and sold based on the blind faith that these debts will keep paying out. Laughably, this was supposed to reduce risk and exposure. In reality no one has any idea what on Earth is in them, who has bought them or who has been exposed. Credit Default Swaps are supposed to insure against this but it's quite clear that there is nothing there to back them up.

The penny still hasn't dropped that no one is safe. Everyone swore blind in 2008 that they weren't exposed to this stuff, but they were. Expect various 'crisis' summits over the next few months and yet more bailouts.

[Miguel]

Both Santander and BBVA are, AFAIK, out of this loan.

With all due respect, you don't know that at all. No one is being told anything about this and the 100 billion twill disappear faster than you can say it. They will then find another 100 billion liability they didn't know about...........

With all due respect, those two are the banks less exposed to direct private default in the real estate market. They also turn out to be the best rated spanish banks by the rating agencies (the latest news I found, their rating was A in Fitch and S&P). Are they immune? Hell, no. But all chances are they would be the last banks that would need to resort to part of the credit. Furthermore, both Santander and BBVA are not directed by friends of politicians without studies, so chances are higher that the quality of their investments is higher.

The main reason being them acting as normal commecial banks, which means most people didn't get mortgages with them.

Firstly, there is no such thing as a normal commercial bank. They're all at the same things and any regulators that there are stand by and drink the free champagne. Secondly, regardless of who gets mortgages from who there is this thing called the securities market where loans, mortgages and debts are packaged up together, sliced and diced and sold based on the blind faith that these debts will keep paying out. Laughably, this was supposed to reduce risk and exposure. In reality no one has any idea what on Earth is in them, who has bought them or who has been exposed. Credit Default Swaps are supposed to insure against this but it's quite clear that there is nothing there to back them up.

Faith is, perhaps ironically, what moves the world economies at a time where religious faith is at its lowest. But I digress. savings banks are indeed very different from commercial banks, at least in Spain. There are both benefits and counterpoints, but they are different entities from a regulatory point of view. It may be good, bad or just different.

[McMrocks]

I doubt that Santander will have the same problems as Bankia. Although it is a Spanish company most of their business comes from somewhere else. Particularly Brasil where they are doing very well. Their status' are still A-, A2 and BBB.

Leman Brothers had AAA when they become dead.
VIVA LA Rating organisations

[Richard]

Both Santander and BBVA are, AFAIK, out of this loan.

With all due respect, you don't know that at all.

With all due respect ...

It is worth noting that the IMF concludes that Spain's two biggest banks, Santander and BBVA, do not need to raise any additional capital. http://www.bbc.co.uk/news/business-18379549

Whilst I agree that commerce is interlinked so no bank is completely immune, it does appear that Santander is not needing direct aid. Obviously they'll benefit from the knock effects of the general capitalisation. They seem to be following the same course as Barclays in the UK.

Also there is a something getting lost in translation here. It seems the Spanish banks are in two categories, those that were nothing but mortgage companies fueling the property bubble versus those that had a more balanced business model based on traditional saving and lending.

[Miguel]

Also there is a something getting lost in translation here. It seems the Spanish banks are in two categories, those that were nothing but mortgage companies fueling the property bubble versus those that had a more balanced business model based on traditional saving and lending.

Thanks, Richard. This is what I meant with the distinction between "Savings Bank" and "Commercial Bank". Maybe "Traditional" would have been a better adjective. There's a nice wiki link on the topic.

Short version: savings banks pay less taxes, on mainly two conditions: a percentage of their earnings must be spent on social spending (cultural activities, sports, student grants,...) and the board must contain a number of people chosen by the local government. Due to incompetence, less pressure for benefits or whatever, savings banks typically offered the better loan terms. Thus, most people got their mortgages there, and not in Santander and BBVA. It should be said, however, that not all savings banks have been negligent.

As an aside, I must apologise if I sound somewhat trollish. I really feel frustrated. Maybe I'm a patriot, after all.

EDIT: (So I don't answer to myself) By 2011, Santander was the biggest bank in the Eurozone, with only HSBC being bigger in Europe. If Santander does a Lehmann & Brothers, our worries will not be about the sponsorship in Ferrari.

[bhall]

I feel your pain. The blurred lines between commercial and savings banks have been an issue here in the states since at least 2008. That's likely to be the case until Glass-Steagall (the repealed law that enforced a difference between commercial and savings banks) or something comparable is adpoted.

Banks must literally be restrained from their avaricious ways. They will not do it themselves, and when they fall they'll take down everyone with them.

[munudeges]

With all due respect ...

It is worth noting that the IMF concludes that Spain's two biggest banks, Santander and BBVA, do not need to raise any additional capital. http://www.bbc.co.uk/news/business-18379549

With all due respect, the BBC is not the fountain of any knowledge for what's going on here - and I'm being exceptionally polite there. Anyone who quotes the BBC loses all credibility instantly on this topic. They have been quite happy to tow the line and tell the public absolutely nothing, and not panicking Santander customers in the UK, and elsewhere, is all part of it. If it were to be public knowledge that Santander was a recipient of this there would be an enormous run on the bank, and like the Icelandic banks deposits were important in shoring up their balance sheets. Be very wary of savings banks offering better interest rates than anyone else. That interest has to come from somewhere and there has to be a reason why they're offering it.

Previous injections of printed cash have ended up going into 'front' financial institutions with the final destination being a big black hole. No one has any idea where the end destination of this is. Balance sheet entries of one bank end up on the balance sheets of other banks in next to know time in order for them to show they are solvent, at least for a short period of time.

Also there is a something getting lost in translation here. It seems the Spanish banks are in two categories, those that were nothing but mortgage companies fueling the property bubble versus those that had a more balanced business model based on traditional saving and lending.

Nope, I'm afraid that is not the case as I've pointed out and it's a very dangerous thing to assume. The Spanish banking system is no different to the fractional banking system and re-hypothecation practised everywhere. Everybody is at it and regulators are in on the act turning a blind eye. Clearly, with the Spanish banks there is something very seriously and fundamentally wrong otherwise the current crisis would not be happening.

[munudeges]

EDIT: (So I don't answer to myself) By 2011, Santander was the biggest bank in the Eurozone, with only HSBC being bigger in Europe.

It might be worth asking how they got to that position because they didn't get to it by being a nice, safe bank that followed all the rules. They remind me a great deal of RBS and their rapid expansion. This bank has alarm bells ringing all over the place.

[munudeges]

.......and Santander gets downgraded by the most liberal ratings agency on Earth.

The initial question was how this would affect Ferrari, and yes it will be a worry for them, but the ramifications will go well beyond Ferrari. We can only wait and see.........

[JohnsonsEvilTwin]

What is it that Ferrari get from Santander anyway?

I know it runs into multiple 10s of millions, but is there an official figure? Allied to their McLaren involvement and one begins to wonder why the need for this exorbitant exposure.
My local Abbey looks like a McLaren pit garage, and when you see all the grannies depositing their pennies, and single mums asking for credit lines, you begin to scratch your head and wonder how they can justify this expense in light of their plight.

Al Jazeera reported that Spanish capital banks have been downgraded to "junk" status and that the loan granted to the Spanish government was in effect a bailout, contrary to the Prime ministers statement.

There was also a very worrying run on Santander that went unreported apparently. Not so much a run as a jog, but Billions in cash was being shifted elsewhere and the recapitalisation of the bank means it will be forced to sell off profitable arms of its business....yes Brazil is rumoured to be up on the chopping block.
Also saw an amusing interview on BBC news where a cleaner was getting evicted from her house of 220,000 euros, still owing the bank 199,000......guess who loaned her the cash?

I wonder what would happen if banks where allowed to fail? They sure as hell deserve to.

[bhall]

Ferrari weathered the loss of Vodafone pretty well, and I imagine Santander's involvement with the team is roughly similar.

[myurr]

Ferrari weathered the loss of Vodafone pretty well, and I imagine Santander's involvement with the team is roughly similar.

Times were different back then though. When was that? 2005/6ish off the top of my head, so happy to be corrected.

Sponsorship money was easier to come by back then and the core groups finances were a little healthier. The Vodafone deal was also effectively just buying space off Marlborough, so the tobacco money would have covered any shortfall.

It's not going to cause Ferrari any real problems but it would be a set back.

[ferrulin]

As a matter of fact, the 100 bn bailout for the Spanish banks will be used by all the Banks EXCEPT Santander and BBVA.

The reason for that is obvious and simple, Santander and BBVA are the only banks in Spain that do not need support.

[bhall]

Ferrari weathered the loss of Vodafone pretty well, and I imagine Santander's involvement with the team is roughly similar.

Times were different back then though. When was that? 2005/6ish off the top of my head, so happy to be corrected.

Sponsorship money was easier to come by back then and the core groups finances were a little healthier. The Vodafone deal was also effectively just buying space off Marlborough, so the tobacco money would have covered any shortfall.

It's not going to cause Ferrari any real problems but it would be a set back.

Vodafone left Ferrari at the end of 2006. They won both titles in 2007 and the Constructors' Championship in 2008, both years without a direct replacement sponsorship. In any case, Philip Morris is still the title sponsor of the team until at least 2016, even if there's no title.

[SeijaKessen]

Ferrari weathered the loss of Vodafone pretty well, and I imagine Santander's involvement with the team is roughly similar.

Times were different back then though. When was that? 2005/6ish off the top of my head, so happy to be corrected.

Sponsorship money was easier to come by back then and the core groups finances were a little healthier. The Vodafone deal was also effectively just buying space off Marlborough, so the tobacco money would have covered any shortfall.

It's not going to cause Ferrari any real problems but it would be a set back.

Vodafone left Ferrari at the end of 2006. They won both titles in 2007 and the Constructors' Championship in 2008, both years without a direct replacement sponsorship. In any case, Philip Morris is still the title sponsor of the team until at least 2016, even if there's no title.

How does that work in the case of Philip Morris?

Once they changed the name from Scuderia Ferrari Marlboro to Scuderia Ferrari, how can Philip Morris justify paying a title sponsorship if they have no title?