Spanish Bank Bailout, More to Come?

On Sunday, the Spanish Government announced its first banking sector bailout measure of the current Crisis. Although this rescued institution is not a financial behemoth, it is still, relative to the size of the Spanish economy, a rather substantial "savings and loan insitution". Now, we have previously discussed the looming troubles in the Spanish economy and banking system, so the announcement regarding the necessity of a Government rescue scheme did not surprise us. What did pique our interest however, was the multitude of official assurances from the Spanish Government, characterizing this situation as an isolated event that was in no way indicative of greater financial system woes. Throughout this global financial crisis, Government forecasts and statements have, regardless of the country from which they emanated, served as a fairly reliable contrarian indicator. The situation in Spain should not be interpreted any differently from the plethora of inaccurate Government forecasts that have been proferred to date. The country is obviously on the brink of a massive banking sector consolidation process that will likely leave only a handful of large institutions intact. The lucky ones will be absorbed by the likes of a Banco Santander, while the unfortunate many will flounder about, eventually slipping into bankruptcy. So is how we anticipate it to be. Sphere: Related Content