BBVA expects negative growth this quarter and unemployment will exceed 22% in 2012. Banks must seize property worth 1,713 million
- Bankia increased their stock of unsold properties by 6.7% bring their total to 4,891 million; Sabadells holdings increased by 4.5% to 2,685 million; Popular increased its stock by 3.5% to 3,838 million; Banco Santander (including their sister company Banesto) added 2.6% to a total of 5,810 millions; Bankinter took over only 10 millions worth, bringing their modest total to 341 million euros.
Altogether, Spanish banks have 176,000 million euros worth of what they call ‘problematic’ properties, which represents 11.4% of their total assets.
Sales tricks on SIMA
The tattered Spanish property industry exhibited its precarious situation at the Madrid property show SIMA last week. The offers of millions of properties for sale met few interested buyers and the promoters could only compete with each other in imaginative promotions. Banco Santander tried to get rid of some of the many dwellings it has taken over from ‘El Pocero’ in Sesena, far away from Madrid. CatalunyaCaixa offered to pay all property purchase expenses and the company Gedesol offered clients houses 0 euros! Of course until first instalment!
50% of families have unpaid debts
Banco de Espańa reports that 50% of Spanish families have unpaid debts; 35.7% have not been able to meet payments on property purchases, 23.3 on instalments for cars.
The good news of the week for those with mortgages tied to the Euribor, is that it fell to 2.044% last week when the new President of the European Central Bank, Italian Mario Draghi, decided to lower their interest rate from 1.5% to 1.25%.
Personal bankruptcies up 23.5%
The number of private individuals going bankrupt during the third quarter was up 23.5% compared with last year. This trend was the same with company bankruptcies: up 26% this year, with 1,268 companies going bust. 35% of the companies were in property promotion and construction.
October car sales down 14.2 %
Sales of new cars, to private purchasers, fell 14.2% in October. That is a fall of 37.3% so far this year compared with the ‘bad year’ of 2010, and is the worst October since the eighties.
Increase in local taxes
Town halls are feverishly searching to find income to pay their impressive debts and the salaries to their many employees. On average, local property rates in the bigger cities increased 4.6%; the tax on economic activities is now 3%. Valencia town increased local taxes by 26% on last year, Zaragoza 23%. In Seville, the average family has paid 693 euros in local taxes this year, in Valencia 673 and in Malaga 532, up 7.8% from last year.
And the smaller municipalities are following the lead of the larger ones.
444,100 unemployed giving up
According to the National Institute of Statistics, in the third quarter 444,100 workers gave up trying to find work because they consider it is hopeless; an increase on the second quarter of almost 5%, of what the statistics classify as ‘inactive workers’. Pessimism is highest amongst older people.
Bonds beat property rentals
Due to the dangers of Spanish finances, interest rates on public bonds has shot up to between 5 and 6% this year, whilst rental income on prime location commercial properties has remained at around 4%. This is the first time in 15 years that income from bonds has exceeded that from property rentals.
Experts warn this may lead to rental increases.
105 years prison for ETA murderer
Francisco Javier Garcia, alias Txapote, former military leader of the Basque terrorist organisation ETA, has been sentenced to 105 years in prison for the murder of leading socialist Fernando Buesa and his bodyguard in 2000. This is the first sentence of an ETA activist following the criminal organisation’s declaration on 20th October to cease its terrorist activities.
Banco de Valencia goes down
Trading in the shares of Banco de Valencia was suspended on Monday. The bank is a wholly owned subsidiary of the ‘bad bank’ Banco Financiero y de Ahorros, the mother company of Bankia. Jose Luis Olivas, the ex-president of Generalitat Valenciana, is the President of both Banco de Valencia and BFY and Vice-President of Bankia…….
Less social security contributors
The number of contributors to the social security system fell by 75,249 in October, 1.73% less than in the same month last year. This is the third consecutive month of substantial losses. The greatest losses were in the Region of Castilla-La Mancha 5.11%; Galicia 2.92% and Murcia 2.56%.
Not paying handicapped
Regions and town halls owe the ‘handicapped sector’ 200 million euros. Hardest hit are the special work centres for the handicapped. The handicap’s organisation CERMI reports that the delay in paying threatens the continuation of most of the services and resources of the group.
Debt collector in election campaign
Pharmacies in the province of Alicante are fed up waiting for their bills to be paid by the regional government (for the discounts to patients with health cards) and are now discussing a plan to charge customers the full amount. They are also threatening to confront Valencia President Alberto Fabra, during the election campaign, with a debt collector, complete with tails and top hat !
Crisis of the week
Last week, Greek Prime Minister Papandreu, announced there would be a referendum in January on the acceptance on the deal, demanded by the Euro zone for new cuts and savings, which he had accepted during the European summits the previous week
A few days later, under pressure from the European leaders and the markets, he renounced on the referendum and opted for an emergency government, led by himself
However, the Greek opposition leaders refused to take part in a government under Papandreu, and he was forced to accept his own resignation. A new government of ‘national emergency’ is still under discussion this morning
The European Union want the Greek parliament to approve the emergency financing package agreed on October 27, before any more euro zone loans are paid to Greece. Athens must get the next 8 billion euro aid instalment before mid-December, if it is to stave off bankruptcy
In Italy, playboy prime minister, Berlusconi is on his last legs. He won a vote in parliament on Tuesday afternoon, but with less than half the total votes. He has declared he will withdraw, to give way for another government that can save the country from its desperate financial situation, but on Wednesday morning, it was still unclear what will come after Berlusconi
Italy’s country risk of is up to 495 points and the interest the country must pay to sell its bond was at 6.74%, on Tuesday, very close to the 7% where the European Central Bank will intervene
The country risk of Spain rose at the same time to above 390 points, with an interest of 5.6% on its 10 year bonds
According to Property Valuers Tinsa, the price of dwellings fell in October another 6.9% compared with same month last year. The average Spanish fall is 23.7 compared with the peak of 2007, but is 30.1% in the Mediterranean area
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