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  • Tough Rules To Hit Spain Banks Hard

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    Alexis Summer
    14 vizualizări4 pagini
    http://hustlinanygma.livejournal.com/767.html Madrid: Spanish lenders are bracing for lower profits and dividends and a tougher funding environment under new rules meant to prepare them for pan-European supervision next year and avoid a repeat of last year’s multi-billion-euro bailout. On Thursday, the Bank of Spain urged lenders to cap cash payouts to shareholders to the equivalent of 25 per cent of profit and to be cautious on dividends paid in shares. That came hard on the heels of another recommendation from the central bank to calculate the impact of removing minimum interest rate clauses on residential mortgages, a move that would lower payments for homemakers but hit bank profit. Also a long-awaited European deal on how to distribute the cost of bank rescues hit share prices last week of some banks in the region’s weaker countries, including Spain, on fears they could find it harder to attract funding. Three banking sources said the new rules did not bode well for the second half of the year because they left investors with the impression that banks had not been fully cleaned up and that more measures were still to come. More uncertainty “The new guidelines on dividends introduce more uncertainty in a sector which already registers high levels of insecurity at a time when the volume of additional provisions that banks will need to book is still unknown,” said one of the banking sources, who declined to be named. Lenders had already been asked by the Bank of Spain to review by September their €208 billion (Dh993.9 billion) in portfolios of refinanced loans. Economy Minister Luis de Guindos said lenders would probably have to book another €10 billion in provisions to cover potential losses on those loans and seek €2 billion in fresh capital once the review is complete. This would add to the more than €80 billion booked last year, which hit profit across the board, forced some lenders to scrap dividend payments or raise new funds on the stock and bond markets and prompted the government to seek €42 billion from the European Union to recapitalise the weakest ones. The massive writedowns and the European-financed bailout have partly restored confidence in the Spanish financial system after it was devastated five years ago when a decade-long property bubble burst. Passive lending The rescue has so far failed to reactivate bank lending to Spanish companies and households, while the rate of non-performing loans continues to rise. The banking source said the latest guidelines on dividends were dictated by the International Monetary Fund (IMF), which earlier in June called on Spanish lenders to reinforce the quantity and quality of their capital by being prudent on cash dividends. The source also said the Bank of Spain wanted all Spanish lenders to be fully cleaned up and well capitalised before pan-European stress tests next year. In the short term, however, banks such as Popular and Sabadell, which did not need public aid last year, may face headwinds. Both have high levels of refinanced loans, have heavily used clauses in mortgage contracts that set floors on interest rates and may find it more difficult to fund themselves under the new EU regime, which mean that second-tier banks in the periphery of the Eurozone are likely to have to pay a premium to attract equity and debt investors. The new guidelines may make it hard for them to stick to their dividend plans for 2013, analysts say. They also say that other banks that have ridden out Spain’s crisis until now, including Spain’s three-biggest lenders Santander, BBVA and Caixabank as well as Bankinter, may have to adapt for different reasons. “Santander and Caixabank dividends per share are probably too high. Bankinter probably needs to adjust downwards its cash dividend per share because payout exceeds 25 per cent ... BBVA could move to more scrips [dividends paid in shares],” Carlos Garcia Gonzalez, an analyst at Societe Gene

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    http://hustlinanygma.livejournal.com/767.html Madrid: Spanish lenders are bracing for lower profits and dividends and a tougher funding environment under new rules meant to prepare them for pan-European supervision next year and avoid a repeat of last year’s multi-billion-euro bailout. On Thursday, the Bank of Spain urged lenders to cap cash payouts to shareholders to the equivalent of 25 per cent of profit and to be cautious on dividends paid in shares. That came hard on the heels of another recommendation from the central bank to calculate the impact of removing minimum interest rate clauses on residential mortgages, a move that would lower payments for homemakers but hit bank profit. Also a long-awaited European deal on how to distribute the cost of bank rescues hit share prices last week of some banks in the region’s weaker countries, including Spain, on fears they could find it harder to attract funding. Three banking sources said the new rules did not bode well for the second half of the year because they left investors with the impression that banks had not been fully cleaned up and that more measures were still to come. More uncertainty “The new guidelines on dividends introduce more uncertainty in a sector which already registers high levels of insecurity at a time when the volume of additional provisions that banks will need to book is still unknown,” said one of the banking sources, who declined to be named. Lenders had already been asked by the Bank of Spain to review by September their €208 billion (Dh993.9 billion) in portfolios of refinanced loans. Economy Minister Luis de Guindos said lenders would probably have to book another €10 billion in provisions to cover potential losses on those loans and seek €2 billion in fresh capital once the review is complete. This would add to the more than €80 billion booked last year, which hit profit across the board, forced some lenders to scrap dividend payments or raise new funds on the stock and bond markets and prompted the government to seek €42 billion from the European Union to recapitalise the weakest ones. The massive writedowns and the European-financed bailout have partly restored confidence in the Spanish financial system after it was devastated five years ago when a decade-long property bubble burst. Passive lending The rescue has so far failed to reactivate bank lending to Spanish companies and households, while the rate of non-performing loans continues to rise. The banking source said the latest guidelines on dividends were dictated by the International Monetary Fund (IMF), which earlier in June called on Spanish lenders to reinforce the quantity and quality of their capital by being prudent on cash dividends. The source also said the Bank of Spain wanted all Spanish lenders to be fully cleaned up and well capitalised before pan-European stress tests next year. In the short term, however, banks such as Popular and Sabadell, which did not need public aid last year, may face headwinds. Both have high levels of refinanced loans, have heavily used clauses in mortgage contracts that set floors on interest rates and may find it more difficult to fund themselves under the new EU regime, which mean that second-tier banks in the periphery of the Eurozone are likely to have to pay a premium to attract equity and debt investors. The new guidelines may make it hard for them to stick to their dividend plans for 2013, analysts say. They also say that other banks that have ridden out Spain’s crisis until now, including Spain’s three-biggest lenders Santander, BBVA and Caixabank as well as Bankinter, may have to adapt for different reasons. “Santander and Caixabank dividends per share are probably too high. Bankinter probably needs to adjust downwards its cash dividend per share because payout exceeds 25 per cent ... BBVA could move to more scrips [dividends paid in shares],” Carlos Garcia Gonzalez, an analyst at Societe Gene

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    14 vizualizări4 pagini

    Tough Rules To Hit Spain Banks Hard

    Încărcat de

    Alexis Summer
    http://hustlinanygma.livejournal.com/767.html Madrid: Spanish lenders are bracing for lower profits and dividends and a tougher funding environment under new rules meant to prepare them for pan-European supervision next year and avoid a repeat of last year’s multi-billion-euro bailout. On Thursday, the Bank of Spain urged lenders to cap cash payouts to shareholders to the equivalent of 25 per cent of profit and to be cautious on dividends paid in shares. That came hard on the heels of another recommendation from the central bank to calculate the impact of removing minimum interest rate clauses on residential mortgages, a move that would lower payments for homemakers but hit bank profit. Also a long-awaited European deal on how to distribute the cost of bank rescues hit share prices last week of some banks in the region’s weaker countries, including Spain, on fears they could find it harder to attract funding. Three banking sources said the new rules did not bode well for the second half of the year because they left investors with the impression that banks had not been fully cleaned up and that more measures were still to come. More uncertainty “The new guidelines on dividends introduce more uncertainty in a sector which already registers high levels of insecurity at a time when the volume of additional provisions that banks will need to book is still unknown,” said one of the banking sources, who declined to be named. Lenders had already been asked by the Bank of Spain to review by September their €208 billion (Dh993.9 billion) in portfolios of refinanced loans. Economy Minister Luis de Guindos said lenders would probably have to book another €10 billion in provisions to cover potential losses on those loans and seek €2 billion in fresh capital once the review is complete. This would add to the more than €80 billion booked last year, which hit profit across the board, forced some lenders to scrap dividend payments or raise new funds on the stock and bond markets and prompted the government to seek €42 billion from the European Union to recapitalise the weakest ones. The massive writedowns and the European-financed bailout have partly restored confidence in the Spanish financial system after it was devastated five years ago when a decade-long property bubble burst. Passive lending The rescue has so far failed to reactivate bank lending to Spanish companies and households, while the rate of non-performing loans continues to rise. The banking source said the latest guidelines on dividends were dictated by the International Monetary Fund (IMF), which earlier in June called on Spanish lenders to reinforce the quantity and quality of their capital by being prudent on cash dividends. The source also said the Bank of Spain wanted all Spanish lenders to be fully cleaned up and well capitalised before pan-European stress tests next year. In the short term, however, banks such as Popular and Sabadell, which did not need public aid last year, may face headwinds. Both have high levels of refinanced loans, have heavily used clauses in mortgage contracts that set floors on interest rates and may find it more difficult to fund themselves under the new EU regime, which mean that second-tier banks in the periphery of the Eurozone are likely to have to pay a premium to attract equity and debt investors. The new guidelines may make it hard for them to stick to their dividend plans for 2013, analysts say. They also say that other banks that have ridden out Spain’s crisis until now, including Spain’s three-biggest lenders Santander, BBVA and Caixabank as well as Bankinter, may have to adapt for different reasons. “Santander and Caixabank dividends per share are probably too high. Bankinter probably needs to adjust downwards its cash dividend per share because payout exceeds 25 per cent ... BBVA could move to more scrips [dividends paid in shares],” Carlos Garcia Gonzalez, an analyst at Societe Gene

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    Tough rules to hit Spain banks hard

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    Madrid: Spanish lenders are bracing for lower profits and dividends and a tougher funding environment under new rules meant to prepare them for pan-European supervision next year and avoid a repeat of last years multi-billion-euro bailout. On Thursday, the Bank of Spain urged lenders to cap cash payouts to shareholders to the equivalent of 25 per cent of profit and to be cautious on dividends paid in shares. That came hard on the heels of another recommendation from the central bank to calculate the impact of removing minimum interest rate clauses on residential mortgages, a move that would lower payments for homemakers but hit bank profit. Also a long-awaited European deal on how to distribute the cost of bank rescues hit share prices last week of some banks in the regions weaker countries, including Spain, on fears they could find it harder to attract funding. Three banking sources said the new rules did not bode well for the second half of the year because they left investors with the impression that banks had not been fully cleaned up and that more measures were still to come.

    More uncertainty The new guidelines on dividends introduce more uncertainty in a sector which already registers high levels of insecurity at a time when the volume of additional provisions that banks will need to book is still unknown, said one of the banking sources, who declined to be named. Lenders had already been asked by the Bank of Spain to review by September their 208 billion (Dh993.9 billion) in portfolios of refinanced loans. Economy Minister Luis de Guindos said lenders would probably have to book another 10 billion in provisions to cover potential losses on those loans and seek 2 billion in fresh capital once the review is complete. This would add to the more than 80 billion booked last year, which hit profit across the board, forced some lenders to scrap dividend payments or raise new funds on the stock and bond markets and prompted the government to seek 42 billion from the European Union to recapitalise the weakest ones. The massive writedowns and the European-financed bailout have partly restored confidence in the Spanish financial system after it was devastated five years ago when a decade-long property bubble burst. Passive lending The rescue has so far failed to reactivate bank lending to Spanish companies and households, while the rate of non-performing loans continues to rise.

    The banking source said the latest guidelines on dividends were dictated by the International Monetary Fund (IMF), which earlier in June called on Spanish lenders to reinforce the quantity and quality of their capital by being prudent on cash dividends. The source also said the Bank of Spain wanted all Spanish lenders to be fully cleaned up and well capitalised before pan-European stress tests next year. In the short term, however, banks such as Popular and Sabadell, which did not need public aid last year, may face headwinds. Both have high levels of refinanced loans, have heavily used clauses in mortgage contracts that set floors on interest rates and may find it more difficult to fund themselves under the new EU regime, which mean that second-tier banks in the periphery of the Eurozone are likely to have to pay a premium to attract equity and debt investors.

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