Europe’s banks turn to bullfight loans

Financial Events


Index Apr12.pngThe blog’s IeC Boom/Gloom sentiment indicator (blue column) continues to be neutral on the outlook. As the chart shows, this is quite unlike its performance in early 2009. Then it rose rapidly from February – accurately forecasting the major recovery that was about to start.

The problem, of course, is that the austerity reading (red line) remains too strong for comfort. Central bank lending has masked the issue, as banks have always been able to borrow more money from them. But lending only helps with cash flow, it doesn’t help with solvency problems.

The major problems today are in Europe. The European Central Bank averted near-catastrophe in December with its €1tn ($1.4tn) LTRO, Long-Term Refinancing Operation. This was meant to provide the banks with time to rebuild their balance sheets.

Instead, just as one would expect, they have chosen to play even more games in the hope of boosting short-term profits. Thus in Spain, probably next in line after Portugal for another bailout, they have been busy doing deals with bullfighting companies. As the Wall Street Journal reports:

• Fans can’t afford to go to bullfights, with the economy in recession
• This means loans to the bullfight companies are at risk of default
• So now, the banks are lending season-ticket money to bullfight fans

In the short-term, this means the banks avoid a costly default. But instead, they will probably face bigger losses next year. With Spain suffering rising unemployment, repaying a bullfight loan is unlikely to be high on the priority list for many fans in 2013.


US PE exports down 39% despite shale gas


Globalisation had a golden age between 1982-2007. Trade barriers fell almost eve...

Learn more

US auto buyers head for fuel efficiency


Every now and then, genuinely good news comes along in terms of consumer demand....

Learn more
More posts
China’s property sector is at the epicentre of the crisis

A branch of Centaline Property Agency in Hong Kong © Bloomberg Indebted Chinese property developers...

“They may ring their bells now, before long they will be wringing their hands”

The wisdom of Sir Robert Walpole, the UK’s first premier, seems the only possible response to ...

Will stock markets see a Minsky Moment in 2020?

Few investors now remember the days when price discovery was thought to be the key role of stock mar...

Chart of the Decade – the Fed’s support for the S&P 500 will end with a debt crisis

Each year, there has been only one possible candidate for Chart of the Year.  Last year it was the ...

$50bn hole appears in New York financial markets – Fed is “looking into it”

Most people would quickly notice if $50 went missing from their purse or wallet. They would certainl...

China’s renminbi and the global ring of fire

China’s property bubble puts it at the epicentre of the ring of fire © Reuters  China’s de...

Stock markets risk Wile E. Coyote fall despite Powell’s rush to support the S&P 500

How can companies and investors avoid losing money as the global economy goes into a China-led reces...

Why everyone ignored my warnings ahead of the financial crisis

It’s 10 years since my forecast of a global financial crisis came true, as Lehman Brothers col...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more