The case is probably not an isolated case

In a few days of the meeting of G20, the collapse of Caja Castilla - La Mancha, the 13th national savings fund, has not arrived at the best time to José Luis Rodríguez Zapatero, the President of the Spanish Government, in its campaign to convince the participants at the London Summit to adopt the system of supervision currently in force in Spain. The insistence of the Central Bank, Spanish finance actors have had during all the years of 'fat cows' countercyclical shopping. And constant controls were enabled to avoid the errors committed by the vast majority of us banks and European.

Bad languages say that with the "hen to the egg of gold" of real estate, in Spain, the persons concerned did not really need to engage in "structured products"; Spanish finance in less showed good resistance to the international crisis. With a profit of 8.9 billion, Banco Santander has become last year, the champion of Europe of profits before his compatriot and rival BBVA with 5 billion. No Bank in the Iberian Peninsula fell into the red in 2008 and until the end of the month of March, it seemed to be 45 savings banks regional whose cumulative result, while 39 drop, remained very honourable to 6.4 billion euros, drawn by the profits of the Caixa (1.8 billion) and Caja Madrid (840 million), the two leaders of the sector, respectively third and fourth players in Spanish finance.

Until the simultaneous action of the Government and the Bank of Spain to put order in the accounts of Caja Castilla - La Mancha and allow it to continue to operate by providing guarantee EUR 9 billion, the events were give wrong those who predicted an imminent collapse of several cases on the basis of their involvement in real estate. Because many more banks, savings banks were heavily fed the bubble of recent years. Not to mention housing credits given generously to their clients, today in difficulty, they have thus advanced 172 of the 313 billion euro borrowed by developers. Many are now in cessation of payments or hard to assume their financial commitments. In the euphoria that room, they have also invested in all - will in the development of their networks of agencies, out of their regional borders.

Repeated the Governor of the Bank of Spain calls for caution have not followed by effects. For the good reason that the savings banks, real weak links of the Spanish financial system, are under the direct influence of local political authorities who can control up to 50 of their round table alongside the representatives of civil society. With all the dangers that may represent a situation where economic logic is often the second plan. As in the marriage project aborted between BBK and Kutxa whose aim was to create the large basque savings bank which dreamed nationalists then in power in Euskadi. Or this incredible imbroglio in which is immersed, for months, Caja Madrid, in the heart of a battle for power between the Mayor of the capital and the President of the autonomous community, both affiliated with the same party! Typical example of mixing of the genres, Caja Castilla - La Mancha was led by a former Socialist Deputy, perfectly in line with the Government of the region. Which explains the support ring and stumbling granted to local Pharaonic projects developed by the local authority as the creation of an international airport in Ciudad Real, located in the middle of zero. And therefore the catastrophic results of the savings which, far from having registered the 30 million euros initially announced profits, would show a loss of EUR 800 million, involving evil all its solvency ratios. Hence the rescue operation launched by the Bank of Spain, now in command of CCM, which the choice between a refloating, a drastic restructuring with asset sales and layoffs or a liquidation.

The case is probably not an isolated case. Faced with both a lack of liquidity and an outbreak of unpaid, the savings are currently constricted financially. "If international crisis continues, it is probably necessary to restructure a few small and medium-sized entities", recognized the week last Miguel Angel Fernandez Ordonez, the Governor of the Bank of Spain, adding that it was to be expected to resort to public funds "more important than before." Madrid already plans to create a restructuring fund to accompany the movement. 77 Billion euros the amount of the unpaid which may face Spanish savings banks, the analysts of Credit Switzerland estimated EUR 60 billion recapitalization needs in the next two years.

If everyone agrees that the situation is not systemic risks, the Spanish finance is therefore called to enter a period of turbulence in turn. On the banks, where the decline expected activity should lead to mergers between the dozen or so players who compete for the domestic market, order restoration could be done in an orderly manner. What seems less obvious to the savings that the situation will quickly require strong action. What will move at the same time by an accompanying financial and social movement of concentration and a reform of the status of the Cajas that regional policy makers were not yet ready to accept air.