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Friday, May 18, 2012 10:46 AM

Spanish Bad-Loans Ratio at 8.37 Percent, a 17-Year High; CDS at Record High; Bankia Suffers Huge Losses Purchasing 15.5 Million Its Own Shares to Stabilize Price; Spain Hires Goldman Sachs to Value Bankia

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It's time for another roundup on Spain. Every day is time for another roundup on Spain. Today's report is on bad loans, and complete foolishness at Bankia buying its own shares hoping to stabilize its price.

Spanish Bad-Loans Ratio Hits 8.37 Percent

The Wall Street Journal reports Spanish Bad-Loans Ratio Hits 17-Year High

Bad debts held by Spanish banks rose to a 17-year high in March and the cost of insuring the debt of two major Spanish banks against default hit a record Friday a day after the sector was hit by a downgrade, underscoring the continuing challenges posed by the country's five-year property slump.

The central bank said that 8.37% of the loans held by banks, or €147.97 billion ($188 billion), were more than three months overdue for repayment in March, up from 8.3% in February and the highest since September 1994. The total number of non-performing loans is now almost 10 times higher than the level reported in 2007, just as Spain's decade-high property boom peaked.

The rapid deterioration of the loan books was one of four reasons cited by Moody's Investors Service for its downgrade of the credit ratings of Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and 14 other banks in the country late Thursday.

"Moody's announcement will increase speculation that the Iberian state will be forced to ask for external support in order to effectively tackle its banking crisis," said interest rates strategists at Lloyds Bank WBM.

At 0956 GMT, Spain's IBEX-35 blue-chip index was up 0.5%, following a negative start. Bankia's shares gained 19% after they fell 14% Thursday and had suffered 10 straight days of declines, while those of other banks including also bounced after deep losses earlier in the week.
Bankia Suffers Huge Losses Purchasing 15.5 Million Its Own Shares

For the "oops" file, courtesy of Google translate please note Bankia bought 15.5 million shares to try to stop its collapse
May 17, 2012

Bankia tried unsuccessfully to halt the collapse of its stock market price in the days when the crisis broke out of the entity. The bank bought 15.55 million of shares for 33,250,000 euros between 7 and 10 May, as has been reported to the National Securities Market. The result now is that accumulates heavy losses on these securities, which subtracts capital at a time when the bank is in need of them.

In the previous 30 days, Bankia just had bought just over 5 million shares, according to El Confidential, which was published this morning purchases of shares of the entity.

Bankia has failed in the attempt to halt the collapse, which today continues to fall that have become over 17% to 1.37 euros per share. At these prices, only purchases made ​​during those four days, Bankia suffer losses of about 12 million euros.

But the losses are even greater in the previously performed operations to try to sustain the price at which the entity has accumulated treasury of 86.124 million shares, 4.319% of its own capital. In total, the bank has more than 100 million in losses to the treasury share transactions.
Bankia Share Prices

Today's rally looks pretty good but here is a little perspective on Bankia Share Prices.

Union Silliness

For the "where there's public unions, there's stupidity file" Unions urge Employees to buy shares in Bankia to prevent the collapse of the price.
Bankia unions urge their employees and clients to buy shares in the company to prevent the collapse of its stock market price and help ensure its future, according to a statement of the Boards and Professional Association (CACAM).

Under the slogan 'I buy Bankia. Do you? Are we united? ', These professionals Bankia broadcast a statement following an email I have received, the undersigned, with whom they want to send a message of confidence in the project entity.
Bankia Bleeds Cash

Meanwhile, Bankia bleeds cash and will not respond to questions.

El Economista reports Bankia has lost 1 billion euros in deposits in one week.
Bankia customers have withdrawn deposits worth over 1,000 million euros since the government announced its intervention last week, according to data presented suggest the board meeting yesterday.

On Wednesday, Bankia not respond to Reuters requests asking whether there were bank runs Thursday and no one has commented on the information published by the newspaper El Mundo in its paper edition.
Goldman Sachs Hired to Value Bankia

Please consider Spain Hires Goldman Sachs to Value Bankia
The Spanish government has hired Goldman Sachs to carry out an independent valuation of Bankia, the ailing bank taken over by the state last week, Spanish newspaper Expansion said on Friday.

The U.S. bank will review Bankia's and its parent company BFA's books and determine within a month how much the state should inject to refloat the lender, which had to be rescued after its auditor, Deloitte, identified several gaps in last year's accounts.

Expansion said without citing sources that Bankia's financial hole may reach 8 billion euros on top of the 10 billion euros it needs to set aside to cover potential losses on real estate assets, as required by two financial reforms passed by the government in February and last week.
Is this one of those deals where a consultant is hired to give give a predetermined opinion?

We will find out soon enough because no one can possibly determine "Bankia is a solvent entity". In fact, the entire Spanish banking system is clearly insolvent.

Here's the question of the day: Is there any reason Bankia shares will not or should not trade for pennies at some time in the near future?

Mike "Mish" Shedlock
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