Hope: we are on the way out

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03 Nov 2011 12:00 AM by mariadecastro Star rating in Algeciras (Cadiz). 9405 posts Send private message

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 Legal tip 628. Spanish Banks can cover losses of developers 
03 November 2011 @ 10:35 

Ordonez, governor of Bank of Spain, states Banks can cover losses of developers.

The good new is that it is not just the spanish Ordoñez but also the  European Banking Authority (EBA) who  back that the Spanish financial sector has provisions for real estate risks of approximately 55,000 million of Euros, including the anti-crisis savings.

The mainstays of the system are healthy. There are problems  with some finantial entities which are identified, limited and manageable.

The report of Bank of Spain focuses again on real estate exposure.  Sovereign risk is not the enemy to fight in Spain. PP shares this vision.

It is the same vision Paul de Grauwe had bak in 1998 before the Euro was coming in ( you can read his wise, kind of prophetic announcement here)

At least, we know what the illness is and can find the right treatment, this is another good new.

See you in Spain,

Maria

Legal tip 540. Euro-fallacy and Spain´s current situation 
26 May 2011 @ 10:35 

I think of Paul de Grauwe´s statements made in 1998 and wonder what he thinks of current situation of Spain. I guess he thinks that Europeans need to complete the Spanish dream, as it is not a dream we spaniards had alone. 

We dreamt together, let´s work together for it to be completed:

This is a very telling paragraph of De Grauwe´s thinking, written, as you know, back in 1998, before everything started:

Suppose a country, which we arbitrarily call Spain, experiences a boom which is stronger than in the rest of the euro-area. As a result of the boom, output and prices grow faster in Spain than in the other euro-countries. This also leads to a real estate boom and a general asset inflation in Spain. Since the ECB looks at euro-wide data, it cannot do anything to restrain the booming conditions in Spain. In fact the existence of a monetary union is likely to intensify the asset inflation in Spain. Unhindered by exchange risk vast amounts of capital are attracted from the rest of the euro-area. Spanish banks that still dominate the Spanish markets, are pulled into the game and increase their lending. They are driven by the high rates of return produced by ever increasing Spanish asset prices, and by the fact that in a monetary union, they can borrow funds at the same interest rate as banks in Germany, France etc. After the boom comes the bust. Asset prices collapse, creating a crisis in the Spanish banking system.

http://www.eyeonspain.com/blogs/costaluz/5546/legal-tip-527-on-europe-banks-and-spain.aspx

 

What do you think?

Cheers,

Maria

 

 



This message was last edited by mariadecastro on 03/11/2011.

_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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03 Nov 2011 2:03 PM by sandra Star rating in . 812 posts Send private message

sandra´s avatar

Is this the 'Light at the end of the tunnel' that we have all been working towards?

Oh, I do hope so Maria. Thank you for bringing us all this first bit of good news.

Common sense at last!



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03 Nov 2011 2:58 PM by ads Star rating. 4126 posts Send private message

Maria,

How in practice will this work alongside Ley 57/68? Does this simplify the legal process in any way or form, and if so how?

Who exactly will benefit from this?

Is this the fund required to underwrite refunds on all Bank Guarantee cases?





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03 Nov 2011 3:18 PM by Keith110 Star rating in the UK and I am lead.... 681 posts Send private message

Unfortunately I think the Banco de España only considers as a 'real estate risk' the amounts covered by Bank Guarantees.  These amounts are registered in the Bankers Register at the Bank of Spain and are therefore accounted for in some way.

But the deposit money paid by purchasers to developers banks which did not have the corresponding Bank Guarantees issued is really in a Black Hole.

The Banks have allowed the developers to withdraw most of this money and the Banks believe they do not have any responsibility for the money and so they have not accounted for it in their annual accounts.

So nobody is currently accounting for this 'missing' money.  Not the Banks nor the developers.

It really is in a black hole.

When the Banks are finally made to accept their obligations under LEY 57/68 - in cases where they accepted the deposit funds and did not issue or verify the existence of Bank Guarantees - they will suddenly have to account for those funds to repay to purchasers.  That debt will then be added to the debt already owed to the Bank by the developer.

Kind regards

Keith



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LEY 57/1968
CLICK HERE FOR THE BANK GUARANTEES IN SPAIN WEBSITE

       
      

fpag@btinternet.com




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03 Nov 2011 3:25 PM by ads Star rating. 4126 posts Send private message

Do you include generic Bank Guarantees in that scenario Keith, or just those who were given individual BG's?





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03 Nov 2011 3:29 PM by Keith110 Star rating in the UK and I am lead.... 681 posts Send private message

Generic Bank Guarantees are a grey area I think.

Do all 
Generic Bank Guarantees have limits and are they registered in the Bankers Register at the Bank of Spain in the same way as an Individual Bank Guarantee?

I am not sure how a Bank will account for their liability under a Generic Bank Guarantee in their accounting system.

Maybe María can give us a little more information on the Generic Bank Guarantee scenario.

Kind regards

Keith



_______________________

LEY 57/1968
CLICK HERE FOR THE BANK GUARANTEES IN SPAIN WEBSITE

       
      

fpag@btinternet.com




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03 Nov 2011 4:06 PM by mariadecastro Star rating in Algeciras (Cadiz). 9405 posts Send private message

mariadecastro´s avatar

 When we talk about Generic Bank Guarantee, we refer to the agreement between developer and Bank/ Insurance company for the refund of advanced deposits in such development.

What the Burgos Court decission says is that Banks are liable, under professional indemnity, for the lack of issuance of individual cetificates to clients. So regardless you have your individual certificate or not, if you find there was a Guarantee agreement between the developer and a Bank/Insurance comapny, you can claim against these last ones for compensation equivalent to the deposits plus legal interests plus legal costs..

 



This message was last edited by mariadecastro on 03/11/2011.

_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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