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Spanish Business News

The latest business, economic,property, stock market and financial news from Spain. Keep up to date with what is happening with the Spanish economy, stock market, the economic crisis, the euro zone debt sovereign debt crisis and the Spanish property market.

Spain's economy contracts for seventh consecutive quarter
30 April 2013

Spain's economy shrank for a seventh consecutive quarter between January and March as domestic demand slumped.

The country's gross domestic product fell by 0.5% compared with the previous quarter, according to the National Statistics Institute.

On an annual basis, Spain's economy shrank 2% in the quarter - the worst fall since the end of 2011.

Last week, Spain's government cut its forecast for 2013, saying it now expected the economy to shrink by 1.3%.

Its previous estimate had put the rate of contraction at 0.5%.

Source: BBC News

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Lloyds Banking Group sells its operations in Spain to Banco Sabadell
29 April 2013

Lloyds Banking Group plc (the Group) is today announcing that it has agreed to sell its Spanish retail banking operations, including Lloyds Bank International S.A.U and Lloyds Investment España SGIIC S.A.U, to Banco Sabadell, S.A (Banco Sabadell).

The sale comprises the Group's retail and private banking business and the local investment management business in Spain. The business being sold consists mostly of retail mortgages and deposits, with a large portion of non-resident clients. The Group's Spanish corporate banking operations, serving business clients, are not included in this transaction and will continue to operate as usual.

To ensure continued support for our customers in the Spanish market and in conjunction with the sale, the Group is also developing a collaboration agreement with Banco Sabadell which it is expected would involve exploring potential business opportunities in areas including retail, commercial, private banking, asset finance and asset management.

Under the sale agreement, the Group will receive shares equivalent to approximately 1.8 per cent of the total issued share capital of Banco Sabadell as part of the consideration for the sale.  The Group intends to be a supportive shareholder of Banco Sabadell and has undertaken to retain the shares received under the sale agreement for a period of at least two years.

Total consideration will be payable in a mix of shares and cash.  At completion Banco Sabadell will deliver 53.7 million ordinary shares out of their treasury holding with such shares being valued at €84 million (£72 million1) by reference to the volume weighted average share price on 26 April 2013.  An additional consideration of up to €20 million (£17 million1) may be payable in cash within the next five years dependent on mortgage book margins.

As of 31 March 2013 the total assets of the sale were approximately £1,517 million, comprised almost entirely of customer lending, and customer deposits were approximately £670 million.  The business reported a loss of approximately £43 million in 2012, which included an increase in the impairment provision as a percentage of impaired loans to approximately 90 per cent.  The sale of the business is currently expected to lead to a loss on disposal of approximately £250 million1 in the Group's accounts.

The sale is in line with the Group's strategy of rationalising its international presence and ensuring best value for shareholders.  The current senior management employed by Lloyds Bank International S.A.U and all of the staff of the Spanish retail operations will move across with the subsidiaries on sale.  Any cash proceeds of the sale will be used for general corporate purposes.

The sale is subject to regulatory approval and is expected to complete in 2013.


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Spanish house prices need to fall another 10%, Goldman Sachs warns
28 April 2013

Spanish house prices need to fall another 10pc, posing fresh problems for the country’s troubled banking sector, Goldman Sachs has warned.

Another 10pc fall in house prices in Spain would threaten to put the country under even greater pressure. Half a million home owners are in negative equity and the government has had to pass laws to prevent banks repossessing homes, forcing families onto the street.

However, Goldman economists Andrew Benito and Sebastian Graves said more homeowners could be at risk. “Our preferred model values housing based on the relationship between rental yields and real borrowing costs. The current level is consistent with house prices falling by a further 10pc to reach an implied equilibrium,” they said.

Source: The Telegraph

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Spain's unemployment rate hits record high of 27.2 percent
25 April 2013

Spain's unemployment rate has jumped to a record high of 27.2 percent. According to Spain's National Statistics Institute (INE) some 6.2 million people are without work.

The Spanish statistics body reported Thursday that the nation's unemployment rate shot up from 26.02 percent in the last quarter of 2012 to 27.16 percent in the first three months of this year.

The INE said the increase reflected the additional 237,400 people registered as unemployed in the first quarter of 2013.

With more than six million people out of work, the eurozone's fourth largest economy now has the highest unemployment rate since records began in the 1970s.

Source: Deutsche Welle

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Madrid rebrands metro in Vodafone deal
24 April 2013

The British mobile giant has struck a deal to rename part of the Spanish capital’s underground rail network, and to splash its scarlet logo all over its underground signs.


From June, Madrid’s “Line 2”, a line which is depicted as red on maps of the city’s tube and which carries 122,000 passengers a day, will be renamed Line 2 Vodafone.

Meanwhile, the city’s central Sol station - the gateway to Puerta del Sol Madrid’s equivalent of London’s Trafalgar Square - will be renamed Sol Vodafone.

The mobile business will pay Madrid’s metro operator €3m over three years for the privilege, in a deal which will also allow Vodafone to emblazits insignia on Madrid’s official Metro map , on platforms and inside trains.

“It is the first time in Europe that an entire metro line changes its name based on a commercial deal, generating new forms of income,” Vodafone said in a statement.

Read the full article at the Telegraph

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Spain's population shrinks as immigrants flee economic crisis
23 April 2013

Spain's population fell last year for the first time in decades, as immigrants left the country amid a major economic crisis, officials say. The National Statistic Institute (NSI) says the number of residents dropped by almost 206,000 to 47.1m - the decline entirely accounted for by foreigners.

Immigrants from Ecuador and Colombia showed the biggest fall.  The figures do not take into account many Spaniards who have left in search of work but are still on the census.  The statistics agency recorded Spain's first population drop since the regular census began in the 1990s.

Although the number of native Spaniards grew in 2012 by some 10,000 - it only minimally offset the overall fall of nearly 216,000 among registered foreign residents.

The figures show that the ongoing economic crisis has reversed the country's rapid population growth in the decade before the financial crisis erupted in 2008.

Source: BBC News

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De Guindos Suggests Spain to Miss Deficit Plan Amid Weak Growth
20 April 2013

Spanish economy minister Luis de Guindos said he will refrain from imposing extra austerity even as public borrowing figures are likely to miss targets because of a weaker-than-expected economy.

Government fiscal forecasts due April 26 will be adjusted to account for a weaker “economic reality,” de Guindos told reporters in Washington today, suggesting he will miss previously set limits for the current fiscal year. He said forecasts will be “very conservative.”

“Budget policy has to be adjusted to economic reality,” de Guindos said after meetings with Group of 20 finance ministers. “It is essential that fiscal policy in the medium term is seen to be sustainable while bearing in mind the effects on economic activity of excessive fiscal restriction.”

Source: Bloomberg

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Spanish Squatters Invoking Robin Hood Deter Investment
18 April 2013

A 285-unit apartment complex in Parla, less than half an hour’s drive from Madrid, should be an ideal target for investors seeking cheap property in Spain. Unfortunately, two thirds of the building generates zero revenue because it’s overrun by squatters.

“This is happening all over the country,” said Jose Maria Fraile, the town’s mayor, who estimates only 100 apartments in the block built for the council have rental contracts, and not all of those tenants are paying either. “People lost their jobs, they can’t pay mortgages or rent so they lost their homes and this has produced a tide of squatters.”

The gray concrete and orange cinderblock building, peppered with broken windows and graffiti labeling the property as a squat, is about 12 miles (20 kilometers) south of the capital. It’s just one of thousands transferred to Spain’s bad bank, Sareb, after the developer skipped town two years ago and Bankia SA (BKIA), the nationalized lender that backed its construction with an 18 million-euro ($24 million) loan, foreclosed on the property.

The proliferation of illegal tenants threatens to complicate efforts to manage the bad bank, set up by Spain under the terms of a European bailout for its financial system to absorb 37 billion euros of soured real estate. Sareb has pledged to sell 42,500 homes, about half its stock, in the first five years of its 15-year life span and aims to generate a return for investors of 13 to 14 percent. It foresees 1.5 billion euros of asset sales this year, a target that must be met to demonstrate to investors the vehicle is viable.

Read the full article at Bloomberg

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74% of Spaniards believe the economic situation in Spain will be the same or worse a year from now
08 April 2013

According to the latest poll from the Centre for Sociological Research (CIS) for the month of March, 41.7% of Spanish citizens feel that the economic situation in Spain will be worse a year from now, while 32.7% believe it will remain the same.  This means that 7 out of 10 Spanish see no improvement in the economic situation over the next 12 months, and what is even more important, a high percentage of them believe that the trend points to further deterioration in the economy.

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Tax Advisers say the new declaration of foreign assets law is "crazy"
06 April 2013

The president of the Spanish Association of Tax Advisors (AEDAF), Antonio Durán-Sindreu, has said that the rule requiring the reporting of foreign assets is "sheer madness" because its content raises many questions that generate uncertainty among taxpayers.

AEDAF President has said that the consequences of failing to declare are "tremendously" disproportionate and very high and stressed that this law was badly drafted and raised many questions that conveyed a great legal uncertainty.


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Spain 'to revise down growth forecast and seek more time to cut deficit'
02 April 2013

Spain's gross domestic product (GDP) will be forecast to shrink by 1pc, rather than 0.5pc, a government source told Reuters, adding that the ruling party intended to shift emphasis to growth rather than deficit reduction.

Spain is negotiating with the European Commission for more time to bring its deficit within 3pc of GDP, something it is currently expected to do by 2014, the source said.

Spain will increase its 2013 deficit target to 6pc of GDP, from an existing forecast of 4.5pc. The figures on growth and the deficit could still vary by one or two decimal points, depending on the outcome of talks with the Commission, the source said.

The Spanish government is now trying to balance control of state finances with more growth-oriented policies, the source said.

Read the full article at the Telegraph

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