Bank bailouts unfair competition
News Article Date: Monday 19th of January 2009
from Reuters comes a report quoting Spain's finance minister complaining that bank bailouts across Europe have led to unfair competition in favour of these territories.
Moves by some European nations to recapitalise their banks have unfairly boosted them relative to competitors in other countries, Spain's Economy Minister Pedro Solbes said in a newspaper interview published on Sunday.
"The decisions to recapitalise have not been taken with clear and consistent criteria across Europe, it's clear they have not all had the same impact. You could call it unfair competition," Solbes told El Pais.
"To what extent have public-funded recapitalisations in certain countries been excessive and improved some banks' positions relative to others? It's a problem that has to be resolved," Solbes said, without identifying the countries he had in mind.
Countries around Europe have moved to bolster their banks, with Ireland nationalising Anglo Irish Bank (ANGL.I) on Thursday and sources telling Reuters on Friday that Germany is set to part-nationalise Hypo Real Estate (HRXG.DE).
British Prime Minister Gordon Brown warned on Saturday that the global recession could deepen unless banks resist the lure of "financial isolationism". He told the Financial Times a joint international effort would provide the key to unlocking the credit markets and kick starting the recovery.
Spain's banks have so far escaped the fears that have gripped financial systems elsewhere in Europe, but both of the country's biggest banks, Santander (SAN.MC) and BBVA (BBVA.MC), have raised money to reinforce their capital bases.
Spain's Socialist government has also set up a fund of up to 50 billion euros in order to buy high quality assets from the banks to provide them with liquidity and said it would guarantee up to 100 bln euros in new bank debt this year.
Solbes said he was disappointed banks were still not lending as much as he would like despite the government aid as the country faces what the government expects to be the worst recession in 50 years.
"Are we happy with the results up to now? No," he said.